1026-00003 · Calderwood & Harkness LLP · Diligence/Tax

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

TO: Angela Fontaine, Partner, Calderwood & Harkness LLP

FROM: Grace Nakamura, Associate, Calderwood & Harkness LLP

DATE: March 27, 2026

RE: Real Property Tax Analysis — 450 West 34th Street, New York, NY 10001 (Block 754, Lot 42, Borough of Manhattan)

MATTER NO.: 1026-00003

CLIENT: Briarwood Family Office LLC

I. Executive Summary

This memorandum analyzes the real property tax exposure associated with the real property located at 450 West 34th Street, New York, NY 10001 (Block 754, Lot 42, Borough of Manhattan) (the "Property") in connection with the prospective acquisition of the Property by BFO 450 West 34th LLC, a single-purpose Delaware limited liability company to be formed as a wholly owned subsidiary of Briarwood Family Office LLC ("Briarwood" or the "Buyer"), from Meridian Gateway Holdings LLC ("Meridian" or the "Seller"), for a purchase price of One Hundred Twenty Million Dollars ($120,000,000) (the "Purchase Price"). This analysis is prepared as part of the legal due diligence being conducted during the post-Letter of Intent diligence period and is intended to inform the negotiation of the Purchase and Sale Agreement (the "PSA") and the Buyer's overall acquisition underwriting.

The Property currently bears annual real estate taxes of approximately $2,640,000 for fiscal year ("FY") 2025/2026 (July 1, 2025 through June 30, 2026). The New York City Department of Finance (the "DOF") has published a tentative assessed value for FY 2026/2027 of $48,200,000, and the Property is classified as Tax Class 4, which encompasses commercial and industrial properties as well as residential properties containing more than ten units.

Our principal finding is that the contemplated transfer at a purchase price of $120,000,000 creates a meaningful reassessment risk. The Purchase Price exceeds the City's current implied market value estimate by approximately 12%, and while New York City does not employ an automatic reassessment-upon-transfer methodology, the recorded deed consideration may serve as a significant data point in the DOF's income capitalization analysis in subsequent assessment cycles. Under a scenario in which the DOF adjusts its market value estimate to align with the Purchase Price, the assessed value could increase to approximately $54,000,000, resulting in potential annual real estate taxes of approximately $2,960,000 — an increase of approximately $319,200, or 12.1%, over the current tax burden. This increase, while subject to the City's five-year phase-in rules for Tax Class 4 properties, would compress the Property's net operating income ("NOI") and further reduce the debt service coverage ratio ("DSCR") below levels typically required by institutional lenders.

No pending tax certiorari proceedings have been identified with respect to the Property as of the date of this memorandum, though confirmation remains outstanding and should be obtained through both Seller's representations and independent verification. The proration methodology for real estate taxes at closing must be addressed in the PSA, including provisions for a post-closing true-up adjustment in the event that the FY 2026/2027 tax rate has not been finalized as of the closing date.

We recommend close coordination with Edgemont Nash & Co. LLP ("Edgemont Nash"), the Buyer's accountant and tax advisor, and specifically with Laura Siddiqui, CPA, Engagement Partner, to develop detailed tax projections under various reassessment scenarios and to evaluate the economics and timing of a potential post-acquisition tax certiorari strategy. The specific recommendations and next steps are set forth in Section X below.

II. Property Overview

The following summary of the Property's physical, financial, and zoning characteristics is derived from the Seller's offering materials, operating statements provided to date, publicly available records of the NYC Department of Finance and the NYC Department of Buildings, and the Preliminary Title Report issued by Granite State Title Insurance Company.

Address and Tax Lot. The Property is located at 450 West 34th Street, New York, NY 10001, and is designated as Block 754, Lot 42, in the Borough of Manhattan, County of New York.

Building Description. The Property consists of a mixed-use building containing fourteen (14) stories above grade plus a cellar level, totaling approximately 186,400 gross square feet. The building was originally constructed in 1928 and underwent a substantial renovation program between 2016 and 2020, during which Meridian Gateway Holdings LLC invested approximately $14,200,000 in capital improvements. These improvements included, among other items, a full lobby renovation, elevator modernization, facade restoration, window replacement on upper floors, mechanical system upgrades (including a new HVAC system for the office floors), and the build-out of the residential units on Floors 10 through 14.

Composition and Layout. The building's component uses are distributed as follows:

Occupancy. As of the most recent rent roll provided by the Seller (dated February 2026), overall occupancy stands at approximately 87.4%. The retail component is fully leased (100% occupancy), the office component is approximately 81.2% leased, and the residential component is approximately 94.7% occupied (two of the 38 units are currently vacant). The relatively lower office occupancy reflects market conditions in the Midtown West / Hudson Yards corridor, where several competing office properties have come online in recent years.

Zoning. The Property is located in a C6-4 zoning district. The lot area is 20,125 square feet. The C6-4 district permits a floor area ratio ("FAR") of 10.0 for both commercial and residential uses, resulting in a maximum permitted floor area of 201,250 square feet. The existing building, at 186,400 gross square feet, is within the permitted envelope, and the Property does not appear to carry unused development rights of material significance for purposes of this analysis (although the precise calculation of available air rights should be confirmed in connection with the broader zoning analysis).

Financial Summary. Based on the operating statements furnished by the Seller, the Property's annualized in-place net operating income is approximately $6,960,000. At the negotiated Purchase Price of $120,000,000, this implies a capitalization rate of approximately 5.80% and a price per square foot of approximately $643.78. These metrics are generally consistent with recent transaction comparables for mixed-use properties in the West Midtown submarket, though the cap rate is at the lower end of the range, reflecting the significant renovation investment and the Property's location proximate to Hudson Yards and the Javits Center expansion area.

Acquisition History. Meridian Gateway Holdings LLC acquired the Property on April 14, 2011, for a purchase price of $68,500,000, as reflected in the existing owner's title insurance policy issued by Granite State Title Insurance Company (Policy No. GST-2011-04872, insured amount $68,500,000, dated April 14, 2011). The Seller has held the Property for approximately fifteen years and has invested an additional $14,200,000 in capital improvements during that period, for a total historical cost basis (before depreciation) of approximately $82,700,000.

III. Current Tax Assessment and Tax Liability

A. Current Assessed Value and Tax Year

For FY 2025/2026 (July 1, 2025 through June 30, 2026), the Property bears annual real estate taxes of approximately $2,640,000. The Property is classified by the NYC Department of Finance as a Tax Class 4 property. Under the New York City property tax classification system, Tax Class 4 encompasses all commercial and industrial properties, as well as residential properties containing more than ten (10) dwelling units. Because the Property is a mixed-use building containing both commercial space (retail and office) and 38 residential rental units — well in excess of the ten-unit threshold — the entire Property is assessed as a single Tax Class 4 parcel. This classification is consistent with the DOF's standard treatment of mixed-use buildings of this scale and composition.

It bears noting that Tax Class 4 properties are subject to a distinct set of assessment rules compared to properties in Tax Classes 1 through 3. In particular, Tax Class 4 properties are assessed based on an income capitalization methodology (discussed in greater detail in Section IV.A below), and the applicable tax rate is set annually by the New York City Council. The Tax Class 4 rate has historically been the highest among the four tax classes, typically ranging between 10% and 12% of assessed value in recent years, though the effective tax burden is modulated by the assessment ratio (currently 45% of market value for Tax Class 4 properties).

B. Tentative FY 2026/2027 Assessment

The DOF has published a tentative assessed value for the Property of $48,200,000 for FY 2026/2027. This figure represents the value that will appear on the tentative assessment roll and is subject to adjustment before the final assessment roll is published. Property owners have the right to challenge tentative assessments through applications to the NYC Tax Commission, with a filing deadline of March 1 for the upcoming fiscal year.

Based on the current year's tax liability and the tentative assessed value, the effective tax rate can be derived as follows:

$2,640,000 (FY 2025/2026 taxes) ÷ $48,200,000 (tentative assessed value) ≈ 5.48%

This effective rate reflects the combined impact of the Tax Class 4 tax rate, the assessment ratio, and any applicable adjustments. It is important to note that the actual Tax Class 4 tax rate for FY 2026/2027 has not yet been finalized by the New York City Council. The City Council typically adopts the tax rates in June of each year, in connection with the adoption of the City's operating budget. Accordingly, the actual FY 2026/2027 tax rate may differ from the FY 2025/2026 rate, although significant year-over-year changes in the Tax Class 4 rate have been relatively uncommon in recent fiscal years.

If the effective tax rate remains approximately constant at 5.48%, and if the tentative assessed value of $48,200,000 is not materially adjusted upon finalization of the assessment roll, projected FY 2026/2027 real estate taxes would remain in the vicinity of $2,640,000. However, both the assessment and the tax rate remain subject to change, and the analysis in Section IV below addresses the potential for an upward adjustment in assessed value attributable to the contemplated transfer.

C. Historical Assessment Trend

Meridian Gateway Holdings LLC acquired the Property on April 14, 2011, for a purchase price of $68,500,000. At the time of acquisition, the Property was an aging mixed-use building that had not undergone significant renovation in several decades, and the assessed value reflected that condition. Following the acquisition, Meridian invested approximately $14,200,000 in capital improvements between 2016 and 2020, substantially upgrading the building's physical condition, mechanical systems, and tenant amenity package. These improvements enabled Meridian to increase rental rates across all components of the building, particularly in the office and residential portions, driving meaningful growth in the Property's income stream over the post-renovation period.

The DOF's assessment methodology for Tax Class 4 properties relies on an income capitalization approach. Under this methodology, the assessor estimates the property's market value by applying a capitalization rate to the property's net income (or, in some cases, gross income). As the Property's income stream grew following the renovation, it is likely that the DOF's assessed value increased correspondingly over the 2016–2026 period. The trajectory from the implied market value at the time of Meridian's acquisition ($68,500,000) to the current implied market value (approximately $107,111,111, as discussed below) is consistent with a compound annual growth rate of approximately 3.0% over fifteen years, which is within the range of market value growth observed for comparable mixed-use properties in Manhattan during this period.

We note that the existing title insurance policy from Granite State Title Insurance Company (Policy No. GST-2011-04872, insured amount $68,500,000, dated April 14, 2011) was issued in connection with Meridian's original acquisition and reflects the purchase price at that time. The assessed value has evolved considerably since the issuance of that policy, and the policy's insured amount does not represent the Property's current market value or assessed value.

We are in the process of requesting from the Seller a complete history of assessed values for each fiscal year since FY 2011/2012, which will allow us to map the assessment trajectory and identify any anomalies or abrupt changes that may inform our analysis of reassessment risk.

IV. Reassessment Risk Upon Transfer

A. NYC Assessment Methodology for Tax Class 4

The assessment methodology employed by the NYC Department of Finance for Tax Class 4 properties is based on an income capitalization approach. Under this approach, the DOF estimates the property's market value by analyzing the property's actual or estimated income stream, applying an appropriate capitalization rate derived from comparable market transactions, and converting the resulting net income into a market value estimate. The DOF may use either a direct capitalization method or, in some cases, a gross income multiplier approach, depending on the property type, available data, and internal assessment guidelines.

Once the assessor determines the property's market value, the assessed value is derived by applying the statutory assessment ratio for Tax Class 4 properties, which is currently 45% of market value. Thus, the assessed value for a Tax Class 4 property is calculated as:

Assessed Value = Market Value × 45%

A critical distinction between the NYC assessment system and the systems employed in many other jurisdictions is that New York City does not automatically reassess properties to their transfer price upon sale. In contrast to jurisdictions that employ a "sales ratio" or "acquisition value" methodology — where the assessed value is reset to the purchase price upon each change of ownership (as in, for example, California under Proposition 13) — the NYC system maintains its income-based valuation approach regardless of whether the property has recently changed hands. The DOF continues to apply its income capitalization methodology to derive market value, and the purchase price, while publicly recorded and available to the DOF, does not mechanically override the income-based valuation.

However, and importantly, the DOF does have access to deed transfer records and the associated consideration amounts reported on the Real Property Transfer Report (Form NYC-RPT). A recorded arm's-length transfer at a price significantly in excess of the DOF's then-current market value estimate can serve as a compelling data point that influences the DOF's income analysis in subsequent assessment cycles. The DOF may treat the sale price as evidence that the property's income-producing potential — and thus its market value — is higher than previously estimated. Moreover, the DOF's assessors routinely review transfer prices as part of their market analysis and comparable sales data sets, which inform the capitalization rates and income assumptions used across the borough.

In practical terms, the transfer of the Property at $120,000,000 will not trigger an automatic reassessment to that figure, but it creates a meaningful risk that the DOF will incorporate the sale price into its valuation analysis and adjust the assessed value upward in subsequent fiscal years.

B. Potential Impact of $120,000,000 Purchase Price

The current tentative assessed value of $48,200,000 for FY 2026/2027, when divided by the 45% assessment ratio, implies that the DOF's current market value estimate for the Property is approximately:

$48,200,000 ÷ 0.45 = $107,111,111 (approximately)

The proposed Purchase Price of $120,000,000 exceeds this implied market value estimate by approximately $12,888,889, or roughly 12%. This is a material discrepancy that, in our experience, is likely to attract the attention of the DOF's assessors. While the DOF may not adjust its assessment immediately — particularly given the income-based methodology and the various lags inherent in the assessment process — we believe it is prudent to model a scenario in which the DOF ultimately aligns its market value estimate with or near the Purchase Price.

Under this scenario, if the DOF were to adopt $120,000,000 as the Property's market value, the resulting assessed value would be:

$120,000,000 × 0.45 = $54,000,000

This represents an increase of $5,800,000 over the current tentative assessed value of $48,200,000, or approximately 12.0%.

Applying the current effective tax rate of approximately 5.48% to the higher assessed value yields estimated annual real estate taxes of:

$54,000,000 × 5.48% ≈ $2,959,200

This represents an increase of approximately $319,200 over the current annual tax burden of $2,640,000, or approximately 12.1%. While this is a meaningful increase, it is important to note several moderating factors:

First, the DOF may not immediately adjust its market value estimate to the full $120,000,000 purchase price. The income capitalization methodology relies on income data as well as market comparables, and if the Property's actual income stream does not support a market value of $120,000,000 (i.e., if the buyer has paid a premium above the level implied by current income at market capitalization rates), the DOF may arrive at a market value somewhat below the Purchase Price. The Purchase Price implies a capitalization rate of 5.80% based on current in-place NOI of $6,960,000, which is relatively tight for a mixed-use property with significant office exposure in the current market. If the DOF applies a higher (i.e., less aggressive) capitalization rate, the resulting market value would be lower.

Second, and independently, the phase-in rules applicable to Tax Class 4 properties provide a mechanism that limits the rate at which assessed value increases are realized for tax billing purposes. Under New York City law, increases in assessed value for Tax Class 4 properties are phased in over a five-year period, with the annual increase in the transitional assessed value (the value used to calculate the tax bill) limited to no more than 20% of the prior year's transitional assessed value. This means that even if the DOF were to increase the assessed value from $48,200,000 to $54,000,000 in a single year, the full increase would not be reflected in the tax bill immediately but would instead be phased in over multiple years. The practical effect is that the taxpayer experiences a graduated increase in the annual tax bill rather than a sudden jump.

Third, the 5.48% effective tax rate used in this analysis may change in subsequent fiscal years, as the City Council adjusts the Tax Class 4 tax rate annually. In recent years, the Tax Class 4 rate has been relatively stable, but there is no guarantee that it will remain at current levels.

Notwithstanding these moderating factors, we recommend that Briarwood's financial underwriting incorporate a potential tax increase scenario in which annual real estate taxes rise to approximately $2,960,000 or higher over the medium term (three to five years post-acquisition). This represents a conservative but realistic scenario that accounts for the reassessment risk created by the transfer.

C. Impact on NOI and DSCR

The potential increase in real estate taxes has direct implications for the Property's net operating income and the debt service coverage ratio under the proposed financing.

The Property's current annualized in-place NOI is $6,960,000. Real estate taxes of $2,640,000 are included as an operating expense in the NOI calculation. If real estate taxes increase to approximately $2,960,000, and all other income and expense items remain constant, the adjusted NOI would be:

$6,960,000 − $320,000 = $6,640,000 (approximately)

The proposed senior mortgage from Pinnacle Federal Savings Bank is anticipated to be in the principal amount of $78,000,000. Based on the preliminary term sheet, the estimated annual debt service on this mortgage is approximately $5,986,800 (assuming a fixed interest rate and amortization schedule as outlined in the financing memorandum). The resulting DSCR calculations are as follows:

Both scenarios produce DSCRs below the 1.25× minimum typically required by institutional commercial real estate lenders for permanent mortgage financing. The current DSCR of 1.16× is already a point of concern, and the potential reduction to 1.11× under the reassessment scenario further compresses coverage and increases the risk profile of the proposed financing.

This factor should be flagged in the financing strategy discussions and communicated to the financing team. We understand that Angela Fontaine is preparing a separate Financing Strategy Memorandum for Theodore R. Ashworth and Margaux Ashworth-Levine, the principals of Briarwood Family Office LLC, and we recommend that the tax reassessment risk and its impact on DSCR be specifically addressed in that memorandum. Additionally, Pinnacle Federal Savings Bank may require a tax escrow or reserve in light of the assessed value trajectory, and the terms of any such escrow should be negotiated in the context of the mortgage loan commitment.

V. Tax Certiorari Proceedings

A. Status of Pending Proceedings

Based on our preliminary diligence — including a review of available court records and representations received from the Seller's counsel, Hargrove, Pettigrew & Sloane LLP (Jonathan D. Hargrove, Esq. and Rebecca Tran, Esq.) — no tax certiorari proceedings are currently pending with respect to 450 West 34th Street (Block 754, Lot 42, Borough of Manhattan). A tax certiorari proceeding is a judicial proceeding in which a property owner challenges the assessed value assigned by the DOF, seeking a reduction in the assessment and a corresponding refund of taxes paid in excess of the correct amount. In New York City, the process typically begins with an application to the NYC Tax Commission and, if not resolved at that level, may proceed as an Article 7 proceeding in the Supreme Court of the State of New York.

The absence of a pending certiorari proceeding is a favorable finding for the Buyer, as it means that there is no outstanding dispute regarding the Property's assessed value that could result in a refund payable to the Seller or a retroactive adjustment to the assessment. However, this finding is based on preliminary information and has not yet been independently verified through a comprehensive search. Confirmation should be obtained through the following steps:

(i) Seller's Representation and Warranty in the PSA. The PSA should include a specific representation by the Seller that no tax certiorari proceedings (including applications to the NYC Tax Commission and Article 7 proceedings in Supreme Court) are pending or threatened with respect to the Property, and that no such proceedings have been settled or adjudicated within the past five years without disclosure to the Buyer.

(ii) NYC Tax Commission Records. We will conduct a search of the NYC Tax Commission's records to confirm whether any applications have been filed for the current or any prior fiscal year that remain pending or have been recently resolved.

(iii) Court Index Search. We will conduct a court index search in the Supreme Court, New York County, to confirm the absence of any Article 7 certiorari petition filed by Meridian Gateway Holdings LLC or any predecessor in interest with respect to Block 754, Lot 42.

B. Historical Certiorari Activity

In addition to confirming the absence of currently pending proceedings, it is important to understand whether Meridian Gateway Holdings LLC has historically filed or settled any tax certiorari proceedings during its period of ownership (April 2011 to present). The resolution of a prior certiorari proceeding may have resulted in a negotiated assessed value that serves as a baseline for subsequent assessments. If Meridian previously settled a certiorari matter with the DOF at a stipulated assessed value, that stipulated value may have influenced the current assessment and could provide insight into the DOF's valuation methodology and the relative strength of any future challenge.

We have included in the Preliminary Due Diligence Request List, transmitted to Seller's counsel on March 18, 2026, a request for the following:

• Copies of all tax certiorari petitions, applications, and complaints filed by Meridian Gateway Holdings LLC or any predecessor in interest with respect to the Property.

• Copies of all stipulations of settlement, orders, or judgments entered in connection with any such proceedings.

• A summary of any refunds or credits received by Meridian as a result of any such proceedings, including the fiscal years to which such refunds or credits relate and the amounts received.

• Copies of any correspondence with the DOF or the NYC Tax Commission regarding the Property's assessed value.

We are awaiting a response from Jonathan D. Hargrove and Rebecca Tran at Hargrove, Pettigrew & Sloane LLP and will supplement this memorandum upon receipt of the requested information.

C. Post-Acquisition Certiorari Strategy

Following the acquisition, BFO 450 West 34th LLC, as the new owner of the Property, will have the right to challenge the assessed value through the tax certiorari process. Given the potential for an upward reassessment in FY 2026/2027 or subsequent fiscal years, as discussed in Section IV above, a post-acquisition certiorari filing may be a cost-effective strategy for managing the Property's tax exposure.

The key procedural considerations are as follows:

Filing Deadline. Applications to the NYC Tax Commission must be filed by March 1 of each year for the fiscal year commencing the following July 1. For example, a challenge to the FY 2026/2027 assessment (July 1, 2026 through June 30, 2027) would need to have been filed by March 1, 2026. If the PSA is executed on or about April 11, 2026, and closing occurs on the target date of June 30, 2026, the filing deadline for FY 2026/2027 will have already passed. This creates a gap in which the Buyer will be subject to the FY 2026/2027 assessment without recourse to a certiorari challenge for that fiscal year, unless the Seller has filed or is willing to file a timely application prior to closing.

We recommend evaluating whether the PSA should require the Seller to file a Tax Commission application for FY 2026/2027 prior to the closing, with an assignment of the Seller's rights under such application to the Buyer at or following the closing. Alternatively, if the Seller declines to file, the PSA could include a provision requiring the Seller to cooperate with the Buyer's post-closing efforts to challenge the FY 2026/2027 assessment, to the extent legally permissible.

FY 2027/2028 Certiorari. The earliest fiscal year for which BFO 450 West 34th LLC will be able to file its own certiorari petition as the owner of the Property will be FY 2027/2028, with a filing deadline of March 1, 2027. We recommend that the Buyer begin evaluating the economics and strategy for a FY 2027/2028 certiorari filing promptly after the closing, in order to allow sufficient time to engage specialized certiorari counsel, assemble the necessary income and expense data, and prepare a well-supported application.

Economics of a Certiorari Challenge. The decision to file a certiorari petition should be evaluated in light of the costs and potential benefits. Certiorari counsel in New York City typically work on a contingency fee basis, receiving a percentage (often 15%–35%) of any tax savings achieved through the proceeding. If the assessed value were successfully reduced, the resulting tax savings could be substantial over multiple fiscal years, as a successful certiorari outcome often establishes a reduced assessed value that carries forward until the DOF adjusts the assessment upward in a subsequent cycle. However, there is also a risk that a certiorari proceeding could result in an increase in the assessed value if the DOF cross-petitions and demonstrates that the property is underassessed — a risk that must be carefully evaluated, particularly in light of the transfer at a purchase price that exceeds the current implied market value.

We recommend coordination with Edgemont Nash & Co. LLP (Laura Siddiqui) on the financial analysis and potentially engaging a specialized tax certiorari firm, such as one of the established New York City certiorari practices, to provide a preliminary assessment of the prospects for a successful challenge and the expected economic benefit.

VI. Property Tax Proration at Closing

A. NYC Fiscal Year

The New York City fiscal year for real property tax purposes runs from July 1 through June 30. This is a critical fact for purposes of tax proration at closing, as the proration must be calculated with reference to the applicable fiscal year's tax liability rather than the calendar year.

Real property taxes in New York City are payable in quarterly installments, with due dates of July 1, October 1, January 1, and April 1 of each fiscal year. For FY 2025/2026, the total tax liability is $2,640,000, payable in four quarterly installments of $660,000 each. By the target closing date of June 30, 2026 — the last day of FY 2025/2026 — all four quarterly installments for FY 2025/2026 should have been paid by the Seller. The PSA should require the Seller to represent and warrant that all real estate taxes for FY 2025/2026 have been paid in full, without delinquency, as of the closing date, and to provide evidence of such payment in the form of tax receipts or DOF account statements.

B. Proration Methodology

The PSA should specify that real estate taxes will be prorated on a per diem basis as of the closing date. The proration should be calculated based on the actual tax liability for the applicable fiscal year, apportioned on a 365-day basis (or 366 days in a leap year, as applicable).

If closing occurs on the target date of June 30, 2026, the proration mechanics are relatively straightforward:

• Seller's Share: The Seller will bear FY 2025/2026 real estate taxes for the period from July 1, 2025 through and including June 29, 2026 — a total of 364 days (or 365 days in a leap year). Since all four quarterly installments will have been paid by the Seller, and the Seller bears the tax for all but one day of the fiscal year, the Buyer would credit the Seller for one day of FY 2025/2026 taxes at closing (approximately $7,232.88, based on $2,640,000 ÷ 365 days).

• Buyer's Share: The Buyer will bear taxes from June 30, 2026 forward. As June 30, 2026 is the last day of FY 2025/2026, the Buyer will be responsible for the full FY 2026/2027 tax year (July 1, 2026 through June 30, 2027) and all subsequent fiscal years. The first quarterly installment for FY 2026/2027 will be due on July 1, 2026, the day after closing.

If the closing date is adjusted from the June 30, 2026 target to an earlier or later date, the per diem proration will be calculated based on either the actual FY 2025/2026 taxes ($2,640,000 ÷ 365 = approximately $7,232.88 per day) or, if closing occurs after July 1, 2026, the FY 2026/2027 taxes once finalized. The PSA should address both scenarios and provide clear allocation rules for each.

C. PSA Provisions to Negotiate

The following provisions should be included in the PSA to address real property tax proration and related matters:

1. Seller's Obligation to Pay. The Seller shall pay all real estate taxes due and payable through the closing date, without delinquency, and shall provide evidence of such payment at or prior to closing.

2. Representation Regarding Liens and Assessments. The Seller shall represent and warrant that no real property tax liens, tax sale certificates, or special assessments are outstanding against the Property as of the closing date.

3. Per Diem Proration. Real estate taxes shall be prorated on a per diem basis as of the closing date, based on the actual tax liability for the applicable fiscal year.

4. Post-Closing True-Up. If the FY 2026/2027 tax rate has not been finalized by the City Council as of the closing date, the proration at closing shall be based on the most recent available estimate (e.g., using the FY 2025/2026 effective tax rate applied to the FY 2026/2027 tentative assessed value), and the parties shall reprorate within one hundred twenty (120) days following the date on which the final FY 2026/2027 tax bill is issued, with a corresponding adjustment payment from the party owing the difference to the other party.

5. Certiorari Refund Allocation. If any refund, credit, or abatement of real estate taxes is received as a result of a pending or future tax certiorari proceeding attributable to a pre-closing tax year (i.e., a fiscal year in which the Seller was the owner of the Property), the PSA should allocate such refund or credit between the Seller and the Buyer on a per diem basis, with the Seller entitled to the portion attributable to the period of the Seller's ownership and the Buyer entitled to the portion attributable to the period of the Buyer's ownership. Attorney's fees and costs incurred in obtaining such refund should be deducted before allocation.

6. Assignment of Certiorari Claims. To the extent any certiorari applications or proceedings are pending as of the closing date (which is not currently believed to be the case), the PSA should provide for the assignment of the Seller's rights in such proceedings to the Buyer, together with reasonable cooperation by the Seller in the prosecution thereof.

VII. Special Assessments and BID Charges

The Property at 450 West 34th Street is located within or proximate to the Hudson Yards / Hell's Kitchen area of Manhattan, a neighborhood that has experienced significant development activity and infrastructure investment in recent years. Several Business Improvement Districts ("BIDs") operate in the vicinity, including the Hudson Yards / Hell's Kitchen Alliance BID and the 34th Street Partnership BID. BIDs are authorized under New York State law to levy assessments on properties within their boundaries, in addition to regular real estate taxes, to fund supplemental services such as sanitation, security, streetscape maintenance, and marketing.

We need to confirm whether 450 West 34th Street (Block 754, Lot 42) falls within the boundaries of any active BID. If the Property is subject to BID assessments, the annual assessment amount must be determined and incorporated into the operating expense analysis for purposes of NOI calculation and underwriting. BID assessments are typically levied as a percentage of the property's assessed value or as a fixed dollar amount per square foot, and can range from modest sums to material amounts depending on the BID and the property's size and classification.

In addition to BID assessments, we must confirm whether any special assessments have been levied or are pending against the Property for infrastructure improvements, streetscape enhancements, sewer or water main upgrades, or other municipal capital projects. Special assessments of this nature can constitute a lien on the property and may be payable over a multi-year period.

Both of these items have been included in the due diligence request transmitted to Seller's counsel at Hargrove, Pettigrew & Sloane LLP, and we are awaiting confirmation. We will supplement this memorandum with our findings upon receipt of the relevant documentation.

VIII. Residential Component Considerations

Floors 10 through 14 of the Property contain 38 residential rental units totaling approximately 42,500 square feet, generating approximately $1,836,000 in annual rental income based on the current rent roll. These units were substantially renovated as part of the 2016–2020 capital improvement program.

For purposes of the Property's real estate tax assessment, the residential and commercial components are assessed together as a single Tax Class 4 parcel. The DOF does not separately assess the residential and commercial portions of a mixed-use Tax Class 4 property; rather, the DOF derives a single market value estimate for the entire property based on the aggregate income stream generated by all components. This means that changes in the income generated by the residential units — whether due to market rent increases, vacancy fluctuations, or regulatory rent limitations — will affect the overall assessed value calculation.

A potentially significant issue concerns whether any of the 38 residential units are subject to rent stabilization or other forms of rent regulation under the New York City Rent Stabilization Law and the Housing Stability and Tenant Protection Act of 2019. The rent regulatory status of the residential units is being analyzed separately in the Residential Lease and Rent Regulation Analysis Memorandum being prepared in connection with this transaction. However, for purposes of the real property tax analysis, the rent regulatory status of the units is relevant because the DOF's income capitalization model for Tax Class 4 properties takes into account the actual rents charged, including regulated rents. If some or all of the residential units are rent-stabilized, the regulated rents — which are typically below market rents for comparable unregulated units — would be reflected in the income stream used by the DOF, potentially moderating the assessed value attributable to the residential component.

Conversely, if the units are free-market (unregulated) and rents are at or near market levels, the DOF's income assumptions for the residential component would be higher, supporting a higher assessed value. The 2019 amendments to the rent stabilization law significantly limited the ability of landlords to deregulate units through high-rent vacancy decontrol, which may have implications for the long-term rent trajectory of the residential component and, by extension, the DOF's future income assumptions.

We will cross-reference our analysis with the findings of the Residential Lease and Rent Regulation Analysis Memorandum once that analysis is complete and will update this memorandum accordingly if the rent regulatory status of the units has material implications for the real property tax assessment.

IX. Coordination with Buyer's Accountant

Edgemont Nash & Co. LLP has been engaged as Briarwood Family Office LLC's accountant and tax advisor in connection with the proposed acquisition of the Property. The engagement is led by Laura Siddiqui, CPA, Engagement Partner. Edgemont Nash's offices are located at 1185 Avenue of the Americas, 20th Floor, New York, NY 10036.

The following items require coordination between Calderwood & Harkness LLP and Edgemont Nash & Co. LLP in connection with the real property tax analysis:

1. Verification of Tax Payments. Edgemont Nash should independently verify the Seller's reported real estate tax payments for the current and prior fiscal years and reconcile them with the NYC Department of Finance's online records. Any discrepancies should be flagged and addressed prior to closing.

2. Post-Acquisition Tax Projections. Edgemont Nash should prepare detailed projections of the Property's post-acquisition real estate tax liability under various reassessment scenarios, including (a) no change in assessed value, (b) partial reassessment reflecting a market value increase toward but not reaching the Purchase Price, and (c) full reassessment to the Purchase Price, with the phase-in rules applied in each case. These projections should be integrated into Briarwood's overall financial model for the acquisition.

3. Depreciation Allocation. The real property tax assessed value, and specifically the DOF's allocation between land and improvements, may inform the allocation of the Purchase Price between depreciable improvements and non-depreciable land for federal income tax purposes. Edgemont Nash should analyze the DOF's land and improvement allocation and consider whether it provides a supportable basis for the Buyer's tax depreciation schedule, or whether an independent appraisal-based allocation would be more appropriate.

4. Certiorari Economics. Edgemont Nash should evaluate the potential tax savings from a successful certiorari challenge under various assessed value reduction scenarios and compare those savings against the estimated costs (including contingency fees to certiorari counsel and expert appraisal fees) to determine whether a certiorari filing is economically justified.

5. Transfer Tax Implications. The real property transfer tax and mortgage recording tax implications of the acquisition are being addressed separately in the Transfer Tax and Mortgage Recording Tax Analysis Memorandum. Edgemont Nash should coordinate with us on the transfer tax analysis to ensure consistency between the tax treatment of the transfer for property tax and income tax purposes.

We recommend scheduling a joint conference call with Laura Siddiqui and the Calderwood & Harkness transaction team to discuss the reassessment modeling, certiorari strategy, and integration of the real property tax analysis with Briarwood's overall tax planning for the acquisition. Given the target closing date of June 30, 2026, this call should be scheduled within the next two weeks to allow sufficient time for Edgemont Nash to prepare its projections and for the results to be incorporated into the PSA negotiation and financing strategy.

X. Recommendations and Next Steps

Based on the foregoing analysis, we recommend that the following actions be taken in connection with the real property tax aspects of the proposed acquisition:

1. Confirm Absence of Pending Certiorari Proceedings. Obtain the Seller's specific representation and warranty in the PSA that no tax certiorari proceedings (including Tax Commission applications and Article 7 proceedings) are pending or threatened with respect to the Property. Independently verify this representation through a search of NYC Tax Commission records and a court index search in Supreme Court, New York County.

2. Request Historical Tax Certiorari Information from Seller. Through Seller's counsel at Hargrove, Pettigrew & Sloane LLP (Jonathan D. Hargrove / Rebecca Tran), obtain complete documentation of any tax certiorari proceedings filed, settled, or adjudicated during Meridian's ownership, including copies of all petitions, stipulations, orders, and refund calculations. This request has been included in the Preliminary Due Diligence Request List.

3. Incorporate Reassessment Scenario in Underwriting. Briarwood's financial underwriting model should include a sensitivity analysis incorporating a potential increase in annual real estate taxes from the current $2,640,000 to approximately $2,960,000 (and potentially higher), with corresponding adjustments to NOI and DSCR. This analysis should be prepared in coordination with Edgemont Nash & Co. LLP and should model the phase-in of any assessed value increase under the five-year transitional assessment rules.

4. Draft PSA Tax Proration Provisions. Prepare and negotiate the following provisions for inclusion in the PSA: (a) per diem tax proration as of the closing date; (b) post-closing true-up mechanism with a 120-day reproration window to account for finalization of the FY 2026/2027 tax rate; (c) Seller's representations regarding current payment status and absence of tax liens; (d) allocation methodology for any certiorari refunds attributable to pre-closing tax years; and (e) assignment of any existing certiorari claims (if applicable).

5. Confirm BID and Special Assessment Status. Verify through diligence whether the Property is located within the boundaries of any Business Improvement District and, if so, determine the annual assessment amount. Confirm that no special assessments for infrastructure or municipal capital improvements are pending or outstanding against the Property.

6. Coordinate with Edgemont Nash & Co. LLP. Schedule a joint conference call with Laura Siddiqui, CPA, at Edgemont Nash & Co. LLP to align on reassessment projections, certiorari strategy and economics, depreciation allocation methodology, and integration of the real property tax analysis with Briarwood's overall tax planning for the acquisition.

7. Evaluate Post-Acquisition Certiorari Filing. Begin the assessment of a potential FY 2027/2028 tax certiorari petition well in advance of the March 1, 2027 filing deadline. This evaluation should include engagement of specialized certiorari counsel, assembly of income and expense data, and preparation of a preliminary appraisal analysis to support the challenge.

8. Flag DSCR Impact for Financing Team. Communicate the potential tax increase and its impact on NOI and DSCR to the financing team, and ensure that the real property tax reassessment risk is specifically addressed in the Financing Strategy Memorandum being prepared by Angela Fontaine for Theodore R. Ashworth and Margaux Ashworth-Levine. The DSCR compression from 1.16× to 1.11× under the reassessment scenario should be highlighted as a factor that may affect Pinnacle Federal Savings Bank's underwriting and loan terms.

XI. Assumptions and Limitations

This memorandum is subject to the following assumptions and limitations, which should be considered in evaluating the analysis and recommendations set forth herein:

1. Data Sources. This memorandum is based on publicly available records of the NYC Department of Finance (including the tentative assessment roll for FY 2026/2027), the Seller's operating statements and rent roll provided to date, and information obtained from the Seller's counsel at Hargrove, Pettigrew & Sloane LLP. We have not independently verified the accuracy or completeness of the Seller's financial data, and our analysis is predicated on the assumption that such data is materially accurate.

2. FY 2026/2027 Tax Rate. The final FY 2026/2027 Tax Class 4 tax rate has not yet been adopted by the New York City Council. The projections and calculations in this memorandum are based on the effective tax rate derived from FY 2025/2026 data (approximately 5.48%). Actual FY 2026/2027 taxes may differ based on the adopted tax rate.

3. Tentative Assessment Roll. The FY 2026/2027 tentative assessed value of $48,200,000 is subject to adjustment before publication of the final assessment roll. If the tentative assessed value is changed, the projections in this memorandum should be updated accordingly.

4. Pending Diligence Items. The detailed review of the Seller's actual tax payment history, any participation in tax abatement or exemption programs (including, without limitation, ICAP, 421-a, or J-51 programs), and any BID or special assessment charges is pending receipt of documents requested in the Preliminary Due Diligence Request List transmitted to the Seller's counsel. This memorandum will be supplemented upon receipt and review of those materials.

5. Scope of Analysis. This memorandum addresses only the real property tax exposure associated with the Property for purposes of the acquisition transaction. It does not address federal, state, or local income tax consequences of the acquisition, which are being analyzed by Edgemont Nash & Co. LLP (Laura Siddiqui, CPA, Engagement Partner). Similarly, real property transfer taxes (NYC RPT), New York State transfer taxes, the New York State "mansion tax," and mortgage recording taxes are addressed in the separate Transfer Tax and Mortgage Recording Tax Analysis Memorandum being prepared by this office and are not covered herein.

6. Legal Advice. This memorandum constitutes attorney work product prepared in anticipation of the transaction and is protected by the attorney work product doctrine. It is intended solely for the use of the client, Briarwood Family Office LLC, and the attorneys and advisors working on Matter No. 1026-00003. This memorandum should not be disclosed to third parties without the prior written consent of Calderwood & Harkness LLP.

Please contact the undersigned with any questions or to discuss the recommendations set forth herein.

Grace Nakamura Associate Calderwood & Harkness LLP Direct: (212) 555-0147 gnakamura@calderwoodharkness.com

cc: Calderwood & Harkness LLP Matter File (1026-00003)

Component	Floors	Approximate Area (SF)	Notes
Retail	1–2	28,600	Ground floor and second floor retail
Office	3–9	97,300	Seven floors of Class B+ office space
Residential	10–14	42,500	38 rental units
Cellar	Cellar	18,000	Storage and mechanical
Total	186,400
Scenario	Annual Taxes	NOI	Annual Debt Service	DSCR
Current (FY 2025/2026)	$2,640,000	$6,960,000	$5,986,800	1.16×
Reassessment Scenario	$2,960,000	$6,640,000	$5,986,800	1.11×

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Angela Fontaine, Partner, Calderwood & Harkness LLP
FROM: Grace Nakamura, Associate, Calderwood & Harkness LLP
DATE: March 27, 2026
RE: Real Property Tax Analysis — 450 West 34th Street, New York, NY 10001 (Block 754, Lot 42, Borough of Manhattan)
MATTER NO.: 1026-00003
CLIENT: Briarwood Family Office LLC
I. Executive Summary
This memorandum analyzes the real property tax exposure associated with the real property located at 450 West 34th Street, New York, NY 10001 (Block 754, Lot 42, Borough of Manhattan) (the "Property") in connection with the prospective acquisition of the Property by BFO 450 West 34th LLC, a single-purpose Delaware limited liability company to be formed as a wholly owned subsidiary of Briarwood Family Office LLC ("Briarwood" or the "Buyer"), from Meridian Gateway Holdings LLC ("Meridian" or the "Seller"), for a purchase price of One Hundred Twenty Million Dollars ($120,000,000) (the "Purchase Price"). This analysis is prepared as part of the legal due diligence being conducted during the post-Letter of Intent diligence period and is intended to inform the negotiation of the Purchase and Sale Agreement (the "PSA") and the Buyer's overall acquisition underwriting.
The Property currently bears annual real estate taxes of approximately $2,640,000 for fiscal year ("FY") 2025/2026 (July 1, 2025 through June 30, 2026). The New York City Department of Finance (the "DOF") has published a tentative assessed value for FY 2026/2027 of $48,200,000, and the Property is classified as Tax Class 4, which encompasses commercial and industrial properties as well as residential properties containing more than ten units.
Our principal finding is that the contemplated transfer at a purchase price of $120,000,000 creates a meaningful reassessment risk. The Purchase Price exceeds the City's current implied market value estimate by approximately 12%, and while New York City does not employ an automatic reassessment-upon-transfer methodology, the recorded deed consideration may serve as a significant data point in the DOF's income capitalization analysis in subsequent assessment cycles. Under a scenario in which the DOF adjusts its market value estimate to align with the Purchase Price, the assessed value could increase to approximately $54,000,000, resulting in potential annual real estate taxes of approximately $2,960,000 — an increase of approximately $319,200, or 12.1%, over the current tax burden. This increase, while subject to the City's five-year phase-in rules for Tax Class 4 properties, would compress the Property's net operating income ("NOI") and further reduce the debt service coverage ratio ("DSCR") below levels typically required by institutional lenders.
No pending tax certiorari proceedings have been identified with respect to the Property as of the date of this memorandum, though confirmation remains outstanding and should be obtained through both Seller's representations and independent verification. The proration methodology for real estate taxes at closing must be addressed in the PSA, including provisions for a post-closing true-up adjustment in the event that the FY 2026/2027 tax rate has not been finalized as of the closing date.
We recommend close coordination with Edgemont Nash & Co. LLP ("Edgemont Nash"), the Buyer's accountant and tax advisor, and specifically with Laura Siddiqui, CPA, Engagement Partner, to develop detailed tax projections under various reassessment scenarios and to evaluate the economics and timing of a potential post-acquisition tax certiorari strategy. The specific recommendations and next steps are set forth in Section X below.
II. Property Overview
The following summary of the Property's physical, financial, and zoning characteristics is derived from the Seller's offering materials, operating statements provided to date, publicly available records of the NYC Department of Finance and the NYC Department of Buildings, and the Preliminary Title Report issued by Granite State Title Insurance Company.
Address and Tax Lot. The Property is located at 450 West 34th Street, New York, NY 10001, and is designated as Block 754, Lot 42, in the Borough of Manhattan, County of New York.
Building Description. The Property consists of a mixed-use building containing fourteen (14) stories above grade plus a cellar level, totaling approximately 186,400 gross square feet. The building was originally constructed in 1928 and underwent a substantial renovation program between 2016 and 2020, during which Meridian Gateway Holdings LLC invested approximately $14,200,000 in capital improvements. These improvements included, among other items, a full lobby renovation, elevator modernization, facade restoration, window replacement on upper floors, mechanical system upgrades (including a new HVAC system for the office floors), and the build-out of the residential units on Floors 10 through 14.
Composition and Layout. The building's component uses are distributed as follows:
Occupancy. As of the most recent rent roll provided by the Seller (dated February 2026), overall occupancy stands at approximately 87.4%. The retail component is fully leased (100% occupancy), the office component is approximately 81.2% leased, and the residential component is approximately 94.7% occupied (two of the 38 units are currently vacant). The relatively lower office occupancy reflects market conditions in the Midtown West / Hudson Yards corridor, where several competing office properties have come online in recent years.
Zoning. The Property is located in a C6-4 zoning district. The lot area is 20,125 square feet. The C6-4 district permits a floor area ratio ("FAR") of 10.0 for both commercial and residential uses, resulting in a maximum permitted floor area of 201,250 square feet. The existing building, at 186,400 gross square feet, is within the permitted envelope, and the Property does not appear to carry unused development rights of material significance for purposes of this analysis (although the precise calculation of available air rights should be confirmed in connection with the broader zoning analysis).
Financial Summary. Based on the operating statements furnished by the Seller, the Property's annualized in-place net operating income is approximately $6,960,000. At the negotiated Purchase Price of $120,000,000, this implies a capitalization rate of approximately 5.80% and a price per square foot of approximately $643.78. These metrics are generally consistent with recent transaction comparables for mixed-use properties in the West Midtown submarket, though the cap rate is at the lower end of the range, reflecting the significant renovation investment and the Property's location proximate to Hudson Yards and the Javits Center expansion area.
Acquisition History. Meridian Gateway Holdings LLC acquired the Property on April 14, 2011, for a purchase price of $68,500,000, as reflected in the existing owner's title insurance policy issued by Granite State Title Insurance Company (Policy No. GST-2011-04872, insured amount $68,500,000, dated April 14, 2011). The Seller has held the Property for approximately fifteen years and has invested an additional $14,200,000 in capital improvements during that period, for a total historical cost basis (before depreciation) of approximately $82,700,000.
III. Current Tax Assessment and Tax Liability
A. Current Assessed Value and Tax Year
For FY 2025/2026 (July 1, 2025 through June 30, 2026), the Property bears annual real estate taxes of approximately $2,640,000. The Property is classified by the NYC Department of Finance as a Tax Class 4 property. Under the New York City property tax classification system, Tax Class 4 encompasses all commercial and industrial properties, as well as residential properties containing more than ten (10) dwelling units. Because the Property is a mixed-use building containing both commercial space (retail and office) and 38 residential rental units — well in excess of the ten-unit threshold — the entire Property is assessed as a single Tax Class 4 parcel. This classification is consistent with the DOF's standard treatment of mixed-use buildings of this scale and composition.
It bears noting that Tax Class 4 properties are subject to a distinct set of assessment rules compared to properties in Tax Classes 1 through 3. In particular, Tax Class 4 properties are assessed based on an income capitalization methodology (discussed in greater detail in Section IV.A below), and the applicable tax rate is set annually by the New York City Council. The Tax Class 4 rate has historically been the highest among the four tax classes, typically ranging between 10% and 12% of assessed value in recent years, though the effective tax burden is modulated by the assessment ratio (currently 45% of market value for Tax Class 4 properties).
B. Tentative FY 2026/2027 Assessment
The DOF has published a tentative assessed value for the Property of $48,200,000 for FY 2026/2027. This figure represents the value that will appear on the tentative assessment roll and is subject to adjustment before the final assessment roll is published. Property owners have the right to challenge tentative assessments through applications to the NYC Tax Commission, with a filing deadline of March 1 for the upcoming fiscal year.
Based on the current year's tax liability and the tentative assessed value, the effective tax rate can be derived as follows:
$2,640,000 (FY 2025/2026 taxes) ÷ $48,200,000 (tentative assessed value) ≈ 5.48%
This effective rate reflects the combined impact of the Tax Class 4 tax rate, the assessment ratio, and any applicable adjustments. It is important to note that the actual Tax Class 4 tax rate for FY 2026/2027 has not yet been finalized by the New York City Council. The City Council typically adopts the tax rates in June of each year, in connection with the adoption of the City's operating budget. Accordingly, the actual FY 2026/2027 tax rate may differ from the FY 2025/2026 rate, although significant year-over-year changes in the Tax Class 4 rate have been relatively uncommon in recent fiscal years.
If the effective tax rate remains approximately constant at 5.48%, and if the tentative assessed value of $48,200,000 is not materially adjusted upon finalization of the assessment roll, projected FY 2026/2027 real estate taxes would remain in the vicinity of $2,640,000. However, both the assessment and the tax rate remain subject to change, and the analysis in Section IV below addresses the potential for an upward adjustment in assessed value attributable to the contemplated transfer.
C. Historical Assessment Trend
Meridian Gateway Holdings LLC acquired the Property on April 14, 2011, for a purchase price of $68,500,000. At the time of acquisition, the Property was an aging mixed-use building that had not undergone significant renovation in several decades, and the assessed value reflected that condition. Following the acquisition, Meridian invested approximately $14,200,000 in capital improvements between 2016 and 2020, substantially upgrading the building's physical condition, mechanical systems, and tenant amenity package. These improvements enabled Meridian to increase rental rates across all components of the building, particularly in the office and residential portions, driving meaningful growth in the Property's income stream over the post-renovation period.
The DOF's assessment methodology for Tax Class 4 properties relies on an income capitalization approach. Under this methodology, the assessor estimates the property's market value by applying a capitalization rate to the property's net income (or, in some cases, gross income). As the Property's income stream grew following the renovation, it is likely that the DOF's assessed value increased correspondingly over the 2016–2026 period. The trajectory from the implied market value at the time of Meridian's acquisition ($68,500,000) to the current implied market value (approximately $107,111,111, as discussed below) is consistent with a compound annual growth rate of approximately 3.0% over fifteen years, which is within the range of market value growth observed for comparable mixed-use properties in Manhattan during this period.
We note that the existing title insurance policy from Granite State Title Insurance Company (Policy No. GST-2011-04872, insured amount $68,500,000, dated April 14, 2011) was issued in connection with Meridian's original acquisition and reflects the purchase price at that time. The assessed value has evolved considerably since the issuance of that policy, and the policy's insured amount does not represent the Property's current market value or assessed value.
We are in the process of requesting from the Seller a complete history of assessed values for each fiscal year since FY 2011/2012, which will allow us to map the assessment trajectory and identify any anomalies or abrupt changes that may inform our analysis of reassessment risk.
IV. Reassessment Risk Upon Transfer
A. NYC Assessment Methodology for Tax Class 4
The assessment methodology employed by the NYC Department of Finance for Tax Class 4 properties is based on an income capitalization approach. Under this approach, the DOF estimates the property's market value by analyzing the property's actual or estimated income stream, applying an appropriate capitalization rate derived from comparable market transactions, and converting the resulting net income into a market value estimate. The DOF may use either a direct capitalization method or, in some cases, a gross income multiplier approach, depending on the property type, available data, and internal assessment guidelines.
Once the assessor determines the property's market value, the assessed value is derived by applying the statutory assessment ratio for Tax Class 4 properties, which is currently 45% of market value. Thus, the assessed value for a Tax Class 4 property is calculated as:
Assessed Value = Market Value × 45%
A critical distinction between the NYC assessment system and the systems employed in many other jurisdictions is that New York City does not automatically reassess properties to their transfer price upon sale. In contrast to jurisdictions that employ a "sales ratio" or "acquisition value" methodology — where the assessed value is reset to the purchase price upon each change of ownership (as in, for example, California under Proposition 13) — the NYC system maintains its income-based valuation approach regardless of whether the property has recently changed hands. The DOF continues to apply its income capitalization methodology to derive market value, and the purchase price, while publicly recorded and available to the DOF, does not mechanically override the income-based valuation.
However, and importantly, the DOF does have access to deed transfer records and the associated consideration amounts reported on the Real Property Transfer Report (Form NYC-RPT). A recorded arm's-length transfer at a price significantly in excess of the DOF's then-current market value estimate can serve as a compelling data point that influences the DOF's income analysis in subsequent assessment cycles. The DOF may treat the sale price as evidence that the property's income-producing potential — and thus its market value — is higher than previously estimated. Moreover, the DOF's assessors routinely review transfer prices as part of their market analysis and comparable sales data sets, which inform the capitalization rates and income assumptions used across the borough.
In practical terms, the transfer of the Property at $120,000,000 will not trigger an automatic reassessment to that figure, but it creates a meaningful risk that the DOF will incorporate the sale price into its valuation analysis and adjust the assessed value upward in subsequent fiscal years.
B. Potential Impact of $120,000,000 Purchase Price
The current tentative assessed value of $48,200,000 for FY 2026/2027, when divided by the 45% assessment ratio, implies that the DOF's current market value estimate for the Property is approximately:
$48,200,000 ÷ 0.45 = $107,111,111 (approximately)
The proposed Purchase Price of $120,000,000 exceeds this implied market value estimate by approximately $12,888,889, or roughly 12%. This is a material discrepancy that, in our experience, is likely to attract the attention of the DOF's assessors. While the DOF may not adjust its assessment immediately — particularly given the income-based methodology and the various lags inherent in the assessment process — we believe it is prudent to model a scenario in which the DOF ultimately aligns its market value estimate with or near the Purchase Price.
Under this scenario, if the DOF were to adopt $120,000,000 as the Property's market value, the resulting assessed value would be:
$120,000,000 × 0.45 = $54,000,000
This represents an increase of $5,800,000 over the current tentative assessed value of $48,200,000, or approximately 12.0%.
Applying the current effective tax rate of approximately 5.48% to the higher assessed value yields estimated annual real estate taxes of:
$54,000,000 × 5.48% ≈ $2,959,200
This represents an increase of approximately $319,200 over the current annual tax burden of $2,640,000, or approximately 12.1%. While this is a meaningful increase, it is important to note several moderating factors:
First, the DOF may not immediately adjust its market value estimate to the full $120,000,000 purchase price. The income capitalization methodology relies on income data as well as market comparables, and if the Property's actual income stream does not support a market value of $120,000,000 (i.e., if the buyer has paid a premium above the level implied by current income at market capitalization rates), the DOF may arrive at a market value somewhat below the Purchase Price. The Purchase Price implies a capitalization rate of 5.80% based on current in-place NOI of $6,960,000, which is relatively tight for a mixed-use property with significant office exposure in the current market. If the DOF applies a higher (i.e., less aggressive) capitalization rate, the resulting market value would be lower.
Second, and independently, the phase-in rules applicable to Tax Class 4 properties provide a mechanism that limits the rate at which assessed value increases are realized for tax billing purposes. Under New York City law, increases in assessed value for Tax Class 4 properties are phased in over a five-year period, with the annual increase in the transitional assessed value (the value used to calculate the tax bill) limited to no more than 20% of the prior year's transitional assessed value. This means that even if the DOF were to increase the assessed value from $48,200,000 to $54,000,000 in a single year, the full increase would not be reflected in the tax bill immediately but would instead be phased in over multiple years. The practical effect is that the taxpayer experiences a graduated increase in the annual tax bill rather than a sudden jump.
Third, the 5.48% effective tax rate used in this analysis may change in subsequent fiscal years, as the City Council adjusts the Tax Class 4 tax rate annually. In recent years, the Tax Class 4 rate has been relatively stable, but there is no guarantee that it will remain at current levels.
Notwithstanding these moderating factors, we recommend that Briarwood's financial underwriting incorporate a potential tax increase scenario in which annual real estate taxes rise to approximately $2,960,000 or higher over the medium term (three to five years post-acquisition). This represents a conservative but realistic scenario that accounts for the reassessment risk created by the transfer.
C. Impact on NOI and DSCR
The potential increase in real estate taxes has direct implications for the Property's net operating income and the debt service coverage ratio under the proposed financing.
The Property's current annualized in-place NOI is $6,960,000. Real estate taxes of $2,640,000 are included as an operating expense in the NOI calculation. If real estate taxes increase to approximately $2,960,000, and all other income and expense items remain constant, the adjusted NOI would be:
$6,960,000 − $320,000 = $6,640,000 (approximately)
The proposed senior mortgage from Pinnacle Federal Savings Bank is anticipated to be in the principal amount of $78,000,000. Based on the preliminary term sheet, the estimated annual debt service on this mortgage is approximately $5,986,800 (assuming a fixed interest rate and amortization schedule as outlined in the financing memorandum). The resulting DSCR calculations are as follows:
Both scenarios produce DSCRs below the 1.25× minimum typically required by institutional commercial real estate lenders for permanent mortgage financing. The current DSCR of 1.16× is already a point of concern, and the potential reduction to 1.11× under the reassessment scenario further compresses coverage and increases the risk profile of the proposed financing.
This factor should be flagged in the financing strategy discussions and communicated to the financing team. We understand that Angela Fontaine is preparing a separate Financing Strategy Memorandum for Theodore R. Ashworth and Margaux Ashworth-Levine, the principals of Briarwood Family Office LLC, and we recommend that the tax reassessment risk and its impact on DSCR be specifically addressed in that memorandum. Additionally, Pinnacle Federal Savings Bank may require a tax escrow or reserve in light of the assessed value trajectory, and the terms of any such escrow should be negotiated in the context of the mortgage loan commitment.
V. Tax Certiorari Proceedings
A. Status of Pending Proceedings
Based on our preliminary diligence — including a review of available court records and representations received from the Seller's counsel, Hargrove, Pettigrew & Sloane LLP (Jonathan D. Hargrove, Esq. and Rebecca Tran, Esq.) — no tax certiorari proceedings are currently pending with respect to 450 West 34th Street (Block 754, Lot 42, Borough of Manhattan). A tax certiorari proceeding is a judicial proceeding in which a property owner challenges the assessed value assigned by the DOF, seeking a reduction in the assessment and a corresponding refund of taxes paid in excess of the correct amount. In New York City, the process typically begins with an application to the NYC Tax Commission and, if not resolved at that level, may proceed as an Article 7 proceeding in the Supreme Court of the State of New York.
The absence of a pending certiorari proceeding is a favorable finding for the Buyer, as it means that there is no outstanding dispute regarding the Property's assessed value that could result in a refund payable to the Seller or a retroactive adjustment to the assessment. However, this finding is based on preliminary information and has not yet been independently verified through a comprehensive search. Confirmation should be obtained through the following steps:
(i) Seller's Representation and Warranty in the PSA. The PSA should include a specific representation by the Seller that no tax certiorari proceedings (including applications to the NYC Tax Commission and Article 7 proceedings in Supreme Court) are pending or threatened with respect to the Property, and that no such proceedings have been settled or adjudicated within the past five years without disclosure to the Buyer.
(ii) NYC Tax Commission Records. We will conduct a search of the NYC Tax Commission's records to confirm whether any applications have been filed for the current or any prior fiscal year that remain pending or have been recently resolved.
(iii) Court Index Search. We will conduct a court index search in the Supreme Court, New York County, to confirm the absence of any Article 7 certiorari petition filed by Meridian Gateway Holdings LLC or any predecessor in interest with respect to Block 754, Lot 42.
B. Historical Certiorari Activity
In addition to confirming the absence of currently pending proceedings, it is important to understand whether Meridian Gateway Holdings LLC has historically filed or settled any tax certiorari proceedings during its period of ownership (April 2011 to present). The resolution of a prior certiorari proceeding may have resulted in a negotiated assessed value that serves as a baseline for subsequent assessments. If Meridian previously settled a certiorari matter with the DOF at a stipulated assessed value, that stipulated value may have influenced the current assessment and could provide insight into the DOF's valuation methodology and the relative strength of any future challenge.
We have included in the Preliminary Due Diligence Request List, transmitted to Seller's counsel on March 18, 2026, a request for the following:
• Copies of all tax certiorari petitions, applications, and complaints filed by Meridian Gateway Holdings LLC or any predecessor in interest with respect to the Property.
• Copies of all stipulations of settlement, orders, or judgments entered in connection with any such proceedings.
• A summary of any refunds or credits received by Meridian as a result of any such proceedings, including the fiscal years to which such refunds or credits relate and the amounts received.
• Copies of any correspondence with the DOF or the NYC Tax Commission regarding the Property's assessed value.
We are awaiting a response from Jonathan D. Hargrove and Rebecca Tran at Hargrove, Pettigrew & Sloane LLP and will supplement this memorandum upon receipt of the requested information.
C. Post-Acquisition Certiorari Strategy
Following the acquisition, BFO 450 West 34th LLC, as the new owner of the Property, will have the right to challenge the assessed value through the tax certiorari process. Given the potential for an upward reassessment in FY 2026/2027 or subsequent fiscal years, as discussed in Section IV above, a post-acquisition certiorari filing may be a cost-effective strategy for managing the Property's tax exposure.
The key procedural considerations are as follows:
Filing Deadline. Applications to the NYC Tax Commission must be filed by March 1 of each year for the fiscal year commencing the following July 1. For example, a challenge to the FY 2026/2027 assessment (July 1, 2026 through June 30, 2027) would need to have been filed by March 1, 2026. If the PSA is executed on or about April 11, 2026, and closing occurs on the target date of June 30, 2026, the filing deadline for FY 2026/2027 will have already passed. This creates a gap in which the Buyer will be subject to the FY 2026/2027 assessment without recourse to a certiorari challenge for that fiscal year, unless the Seller has filed or is willing to file a timely application prior to closing.
We recommend evaluating whether the PSA should require the Seller to file a Tax Commission application for FY 2026/2027 prior to the closing, with an assignment of the Seller's rights under such application to the Buyer at or following the closing. Alternatively, if the Seller declines to file, the PSA could include a provision requiring the Seller to cooperate with the Buyer's post-closing efforts to challenge the FY 2026/2027 assessment, to the extent legally permissible.
FY 2027/2028 Certiorari. The earliest fiscal year for which BFO 450 West 34th LLC will be able to file its own certiorari petition as the owner of the Property will be FY 2027/2028, with a filing deadline of March 1, 2027. We recommend that the Buyer begin evaluating the economics and strategy for a FY 2027/2028 certiorari filing promptly after the closing, in order to allow sufficient time to engage specialized certiorari counsel, assemble the necessary income and expense data, and prepare a well-supported application.
Economics of a Certiorari Challenge. The decision to file a certiorari petition should be evaluated in light of the costs and potential benefits. Certiorari counsel in New York City typically work on a contingency fee basis, receiving a percentage (often 15%–35%) of any tax savings achieved through the proceeding. If the assessed value were successfully reduced, the resulting tax savings could be substantial over multiple fiscal years, as a successful certiorari outcome often establishes a reduced assessed value that carries forward until the DOF adjusts the assessment upward in a subsequent cycle. However, there is also a risk that a certiorari proceeding could result in an increase in the assessed value if the DOF cross-petitions and demonstrates that the property is underassessed — a risk that must be carefully evaluated, particularly in light of the transfer at a purchase price that exceeds the current implied market value.
We recommend coordination with Edgemont Nash & Co. LLP (Laura Siddiqui) on the financial analysis and potentially engaging a specialized tax certiorari firm, such as one of the established New York City certiorari practices, to provide a preliminary assessment of the prospects for a successful challenge and the expected economic benefit.
VI. Property Tax Proration at Closing
A. NYC Fiscal Year
The New York City fiscal year for real property tax purposes runs from July 1 through June 30. This is a critical fact for purposes of tax proration at closing, as the proration must be calculated with reference to the applicable fiscal year's tax liability rather than the calendar year.
Real property taxes in New York City are payable in quarterly installments, with due dates of July 1, October 1, January 1, and April 1 of each fiscal year. For FY 2025/2026, the total tax liability is $2,640,000, payable in four quarterly installments of $660,000 each. By the target closing date of June 30, 2026 — the last day of FY 2025/2026 — all four quarterly installments for FY 2025/2026 should have been paid by the Seller. The PSA should require the Seller to represent and warrant that all real estate taxes for FY 2025/2026 have been paid in full, without delinquency, as of the closing date, and to provide evidence of such payment in the form of tax receipts or DOF account statements.
B. Proration Methodology
The PSA should specify that real estate taxes will be prorated on a per diem basis as of the closing date. The proration should be calculated based on the actual tax liability for the applicable fiscal year, apportioned on a 365-day basis (or 366 days in a leap year, as applicable).
If closing occurs on the target date of June 30, 2026, the proration mechanics are relatively straightforward:
• Seller's Share: The Seller will bear FY 2025/2026 real estate taxes for the period from July 1, 2025 through and including June 29, 2026 — a total of 364 days (or 365 days in a leap year). Since all four quarterly installments will have been paid by the Seller, and the Seller bears the tax for all but one day of the fiscal year, the Buyer would credit the Seller for one day of FY 2025/2026 taxes at closing (approximately $7,232.88, based on $2,640,000 ÷ 365 days).
• Buyer's Share: The Buyer will bear taxes from June 30, 2026 forward. As June 30, 2026 is the last day of FY 2025/2026, the Buyer will be responsible for the full FY 2026/2027 tax year (July 1, 2026 through June 30, 2027) and all subsequent fiscal years. The first quarterly installment for FY 2026/2027 will be due on July 1, 2026, the day after closing.
If the closing date is adjusted from the June 30, 2026 target to an earlier or later date, the per diem proration will be calculated based on either the actual FY 2025/2026 taxes ($2,640,000 ÷ 365 = approximately $7,232.88 per day) or, if closing occurs after July 1, 2026, the FY 2026/2027 taxes once finalized. The PSA should address both scenarios and provide clear allocation rules for each.
C. PSA Provisions to Negotiate
The following provisions should be included in the PSA to address real property tax proration and related matters:
1. Seller's Obligation to Pay. The Seller shall pay all real estate taxes due and payable through the closing date, without delinquency, and shall provide evidence of such payment at or prior to closing.
2. Representation Regarding Liens and Assessments. The Seller shall represent and warrant that no real property tax liens, tax sale certificates, or special assessments are outstanding against the Property as of the closing date.
3. Per Diem Proration. Real estate taxes shall be prorated on a per diem basis as of the closing date, based on the actual tax liability for the applicable fiscal year.
4. Post-Closing True-Up. If the FY 2026/2027 tax rate has not been finalized by the City Council as of the closing date, the proration at closing shall be based on the most recent available estimate (e.g., using the FY 2025/2026 effective tax rate applied to the FY 2026/2027 tentative assessed value), and the parties shall reprorate within one hundred twenty (120) days following the date on which the final FY 2026/2027 tax bill is issued, with a corresponding adjustment payment from the party owing the difference to the other party.
5. Certiorari Refund Allocation. If any refund, credit, or abatement of real estate taxes is received as a result of a pending or future tax certiorari proceeding attributable to a pre-closing tax year (i.e., a fiscal year in which the Seller was the owner of the Property), the PSA should allocate such refund or credit between the Seller and the Buyer on a per diem basis, with the Seller entitled to the portion attributable to the period of the Seller's ownership and the Buyer entitled to the portion attributable to the period of the Buyer's ownership. Attorney's fees and costs incurred in obtaining such refund should be deducted before allocation.
6. Assignment of Certiorari Claims. To the extent any certiorari applications or proceedings are pending as of the closing date (which is not currently believed to be the case), the PSA should provide for the assignment of the Seller's rights in such proceedings to the Buyer, together with reasonable cooperation by the Seller in the prosecution thereof.
VII. Special Assessments and BID Charges
The Property at 450 West 34th Street is located within or proximate to the Hudson Yards / Hell's Kitchen area of Manhattan, a neighborhood that has experienced significant development activity and infrastructure investment in recent years. Several Business Improvement Districts ("BIDs") operate in the vicinity, including the Hudson Yards / Hell's Kitchen Alliance BID and the 34th Street Partnership BID. BIDs are authorized under New York State law to levy assessments on properties within their boundaries, in addition to regular real estate taxes, to fund supplemental services such as sanitation, security, streetscape maintenance, and marketing.
We need to confirm whether 450 West 34th Street (Block 754, Lot 42) falls within the boundaries of any active BID. If the Property is subject to BID assessments, the annual assessment amount must be determined and incorporated into the operating expense analysis for purposes of NOI calculation and underwriting. BID assessments are typically levied as a percentage of the property's assessed value or as a fixed dollar amount per square foot, and can range from modest sums to material amounts depending on the BID and the property's size and classification.
In addition to BID assessments, we must confirm whether any special assessments have been levied or are pending against the Property for infrastructure improvements, streetscape enhancements, sewer or water main upgrades, or other municipal capital projects. Special assessments of this nature can constitute a lien on the property and may be payable over a multi-year period.
Both of these items have been included in the due diligence request transmitted to Seller's counsel at Hargrove, Pettigrew & Sloane LLP, and we are awaiting confirmation. We will supplement this memorandum with our findings upon receipt of the relevant documentation.
VIII. Residential Component Considerations
Floors 10 through 14 of the Property contain 38 residential rental units totaling approximately 42,500 square feet, generating approximately $1,836,000 in annual rental income based on the current rent roll. These units were substantially renovated as part of the 2016–2020 capital improvement program.
For purposes of the Property's real estate tax assessment, the residential and commercial components are assessed together as a single Tax Class 4 parcel. The DOF does not separately assess the residential and commercial portions of a mixed-use Tax Class 4 property; rather, the DOF derives a single market value estimate for the entire property based on the aggregate income stream generated by all components. This means that changes in the income generated by the residential units — whether due to market rent increases, vacancy fluctuations, or regulatory rent limitations — will affect the overall assessed value calculation.
A potentially significant issue concerns whether any of the 38 residential units are subject to rent stabilization or other forms of rent regulation under the New York City Rent Stabilization Law and the Housing Stability and Tenant Protection Act of 2019. The rent regulatory status of the residential units is being analyzed separately in the Residential Lease and Rent Regulation Analysis Memorandum being prepared in connection with this transaction. However, for purposes of the real property tax analysis, the rent regulatory status of the units is relevant because the DOF's income capitalization model for Tax Class 4 properties takes into account the actual rents charged, including regulated rents. If some or all of the residential units are rent-stabilized, the regulated rents — which are typically below market rents for comparable unregulated units — would be reflected in the income stream used by the DOF, potentially moderating the assessed value attributable to the residential component.
Conversely, if the units are free-market (unregulated) and rents are at or near market levels, the DOF's income assumptions for the residential component would be higher, supporting a higher assessed value. The 2019 amendments to the rent stabilization law significantly limited the ability of landlords to deregulate units through high-rent vacancy decontrol, which may have implications for the long-term rent trajectory of the residential component and, by extension, the DOF's future income assumptions.
We will cross-reference our analysis with the findings of the Residential Lease and Rent Regulation Analysis Memorandum once that analysis is complete and will update this memorandum accordingly if the rent regulatory status of the units has material implications for the real property tax assessment.
IX. Coordination with Buyer's Accountant
Edgemont Nash & Co. LLP has been engaged as Briarwood Family Office LLC's accountant and tax advisor in connection with the proposed acquisition of the Property. The engagement is led by Laura Siddiqui, CPA, Engagement Partner. Edgemont Nash's offices are located at 1185 Avenue of the Americas, 20th Floor, New York, NY 10036.
The following items require coordination between Calderwood & Harkness LLP and Edgemont Nash & Co. LLP in connection with the real property tax analysis:
1. Verification of Tax Payments. Edgemont Nash should independently verify the Seller's reported real estate tax payments for the current and prior fiscal years and reconcile them with the NYC Department of Finance's online records. Any discrepancies should be flagged and addressed prior to closing.
2. Post-Acquisition Tax Projections. Edgemont Nash should prepare detailed projections of the Property's post-acquisition real estate tax liability under various reassessment scenarios, including (a) no change in assessed value, (b) partial reassessment reflecting a market value increase toward but not reaching the Purchase Price, and (c) full reassessment to the Purchase Price, with the phase-in rules applied in each case. These projections should be integrated into Briarwood's overall financial model for the acquisition.
3. Depreciation Allocation. The real property tax assessed value, and specifically the DOF's allocation between land and improvements, may inform the allocation of the Purchase Price between depreciable improvements and non-depreciable land for federal income tax purposes. Edgemont Nash should analyze the DOF's land and improvement allocation and consider whether it provides a supportable basis for the Buyer's tax depreciation schedule, or whether an independent appraisal-based allocation would be more appropriate.
4. Certiorari Economics. Edgemont Nash should evaluate the potential tax savings from a successful certiorari challenge under various assessed value reduction scenarios and compare those savings against the estimated costs (including contingency fees to certiorari counsel and expert appraisal fees) to determine whether a certiorari filing is economically justified.
5. Transfer Tax Implications. The real property transfer tax and mortgage recording tax implications of the acquisition are being addressed separately in the Transfer Tax and Mortgage Recording Tax Analysis Memorandum. Edgemont Nash should coordinate with us on the transfer tax analysis to ensure consistency between the tax treatment of the transfer for property tax and income tax purposes.
We recommend scheduling a joint conference call with Laura Siddiqui and the Calderwood & Harkness transaction team to discuss the reassessment modeling, certiorari strategy, and integration of the real property tax analysis with Briarwood's overall tax planning for the acquisition. Given the target closing date of June 30, 2026, this call should be scheduled within the next two weeks to allow sufficient time for Edgemont Nash to prepare its projections and for the results to be incorporated into the PSA negotiation and financing strategy.
X. Recommendations and Next Steps
Based on the foregoing analysis, we recommend that the following actions be taken in connection with the real property tax aspects of the proposed acquisition:
1. Confirm Absence of Pending Certiorari Proceedings. Obtain the Seller's specific representation and warranty in the PSA that no tax certiorari proceedings (including Tax Commission applications and Article 7 proceedings) are pending or threatened with respect to the Property. Independently verify this representation through a search of NYC Tax Commission records and a court index search in Supreme Court, New York County.
2. Request Historical Tax Certiorari Information from Seller. Through Seller's counsel at Hargrove, Pettigrew & Sloane LLP (Jonathan D. Hargrove / Rebecca Tran), obtain complete documentation of any tax certiorari proceedings filed, settled, or adjudicated during Meridian's ownership, including copies of all petitions, stipulations, orders, and refund calculations. This request has been included in the Preliminary Due Diligence Request List.
3. Incorporate Reassessment Scenario in Underwriting. Briarwood's financial underwriting model should include a sensitivity analysis incorporating a potential increase in annual real estate taxes from the current $2,640,000 to approximately $2,960,000 (and potentially higher), with corresponding adjustments to NOI and DSCR. This analysis should be prepared in coordination with Edgemont Nash & Co. LLP and should model the phase-in of any assessed value increase under the five-year transitional assessment rules.
4. Draft PSA Tax Proration Provisions. Prepare and negotiate the following provisions for inclusion in the PSA: (a) per diem tax proration as of the closing date; (b) post-closing true-up mechanism with a 120-day reproration window to account for finalization of the FY 2026/2027 tax rate; (c) Seller's representations regarding current payment status and absence of tax liens; (d) allocation methodology for any certiorari refunds attributable to pre-closing tax years; and (e) assignment of any existing certiorari claims (if applicable).
5. Confirm BID and Special Assessment Status. Verify through diligence whether the Property is located within the boundaries of any Business Improvement District and, if so, determine the annual assessment amount. Confirm that no special assessments for infrastructure or municipal capital improvements are pending or outstanding against the Property.
6. Coordinate with Edgemont Nash & Co. LLP. Schedule a joint conference call with Laura Siddiqui, CPA, at Edgemont Nash & Co. LLP to align on reassessment projections, certiorari strategy and economics, depreciation allocation methodology, and integration of the real property tax analysis with Briarwood's overall tax planning for the acquisition.
7. Evaluate Post-Acquisition Certiorari Filing. Begin the assessment of a potential FY 2027/2028 tax certiorari petition well in advance of the March 1, 2027 filing deadline. This evaluation should include engagement of specialized certiorari counsel, assembly of income and expense data, and preparation of a preliminary appraisal analysis to support the challenge.
8. Flag DSCR Impact for Financing Team. Communicate the potential tax increase and its impact on NOI and DSCR to the financing team, and ensure that the real property tax reassessment risk is specifically addressed in the Financing Strategy Memorandum being prepared by Angela Fontaine for Theodore R. Ashworth and Margaux Ashworth-Levine. The DSCR compression from 1.16× to 1.11× under the reassessment scenario should be highlighted as a factor that may affect Pinnacle Federal Savings Bank's underwriting and loan terms.
XI. Assumptions and Limitations
This memorandum is subject to the following assumptions and limitations, which should be considered in evaluating the analysis and recommendations set forth herein:
1. Data Sources. This memorandum is based on publicly available records of the NYC Department of Finance (including the tentative assessment roll for FY 2026/2027), the Seller's operating statements and rent roll provided to date, and information obtained from the Seller's counsel at Hargrove, Pettigrew & Sloane LLP. We have not independently verified the accuracy or completeness of the Seller's financial data, and our analysis is predicated on the assumption that such data is materially accurate.
2. FY 2026/2027 Tax Rate. The final FY 2026/2027 Tax Class 4 tax rate has not yet been adopted by the New York City Council. The projections and calculations in this memorandum are based on the effective tax rate derived from FY 2025/2026 data (approximately 5.48%). Actual FY 2026/2027 taxes may differ based on the adopted tax rate.
3. Tentative Assessment Roll. The FY 2026/2027 tentative assessed value of $48,200,000 is subject to adjustment before publication of the final assessment roll. If the tentative assessed value is changed, the projections in this memorandum should be updated accordingly.
4. Pending Diligence Items. The detailed review of the Seller's actual tax payment history, any participation in tax abatement or exemption programs (including, without limitation, ICAP, 421-a, or J-51 programs), and any BID or special assessment charges is pending receipt of documents requested in the Preliminary Due Diligence Request List transmitted to the Seller's counsel. This memorandum will be supplemented upon receipt and review of those materials.
5. Scope of Analysis. This memorandum addresses only the real property tax exposure associated with the Property for purposes of the acquisition transaction. It does not address federal, state, or local income tax consequences of the acquisition, which are being analyzed by Edgemont Nash & Co. LLP (Laura Siddiqui, CPA, Engagement Partner). Similarly, real property transfer taxes (NYC RPT), New York State transfer taxes, the New York State "mansion tax," and mortgage recording taxes are addressed in the separate Transfer Tax and Mortgage Recording Tax Analysis Memorandum being prepared by this office and are not covered herein.
6. Legal Advice. This memorandum constitutes attorney work product prepared in anticipation of the transaction and is protected by the attorney work product doctrine. It is intended solely for the use of the client, Briarwood Family Office LLC, and the attorneys and advisors working on Matter No. 1026-00003. This memorandum should not be disclosed to third parties without the prior written consent of Calderwood & Harkness LLP.
Please contact the undersigned with any questions or to discuss the recommendations set forth herein.
Grace Nakamura Associate Calderwood & Harkness LLP Direct: (212) 555-0147 gnakamura@calderwoodharkness.com
cc: Calderwood & Harkness LLP Matter File (1026-00003)
Component | Floors | Approximate Area (SF) | Notes
Retail | 1–2 | 28,600 | Ground floor and second floor retail
Office | 3–9 | 97,300 | Seven floors of Class B+ office space
Residential | 10–14 | 42,500 | 38 rental units
Cellar | Cellar | 18,000 | Storage and mechanical
Total | 186,400
Scenario | Annual Taxes | NOI | Annual Debt Service | DSCR
Current (FY 2025/2026) | $2,640,000 | $6,960,000 | $5,986,800 | 1.16×
Reassessment Scenario | $2,960,000 | $6,640,000 | $5,986,800 | 1.11×

MEMORANDUM

MATTER NO.: 1026-00003

Record

Parties

Dates

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