PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
March 18, 2026
TO: Angela Fontaine, Partner, Real Estate Department
FROM: Cynthia Ho, Associate, Real Estate Department
DATE: March 18, 2026
RE: Preliminary Title Review — 450 West 34th Street, New York, NY 10001 (Block 754, Lot 42, Borough of Manhattan)
CLIENT: Briarwood Family Office LLC
MATTER NO.: 1026-00003
This memorandum is a privileged and confidential attorney work product prepared in connection with the representation of Briarwood Family Office LLC. It is protected by the attorney-client privilege and the work product doctrine and is not intended for distribution to, or reliance by, any third party without the express written consent of this firm.
I. EXECUTIVE SUMMARY
This memorandum sets forth our analysis of the preliminary title report (the "Preliminary Report") issued by Granite State Title Insurance Company (the "Title Company") in connection with the prospective acquisition (the "Acquisition") of the property located at 450 West 34th Street, New York, NY 10001 (the "Property"), identified as Block 754, Lot 42 in the Borough of Manhattan, City and State of New York. The Acquisition is being pursued by BFO 450 West 34th LLC (the "Buyer" or "Acquisition SPV"), a Delaware limited liability company to be formed as a wholly-owned subsidiary of Briarwood Family Office LLC ("Briarwood" or the "Client"), from Meridian Gateway Holdings LLC, a New York limited liability company (the "Seller"), for an anticipated purchase price of One Hundred Twenty Million Dollars ($120,000,000) (the "Purchase Price").
The Preliminary Report was issued by the Title Company under the supervision of Martin Clearfield, Title Officer, located at 140 Broadway, 22nd Floor, New York, NY 10005. The title search was ordered upon the commencement of this firm's engagement on February 25, 2026, and the Preliminary Report was received by this office on March 11, 2026.
The Property consists of a fourteen (14)-story mixed-use building containing approximately 186,400 gross square feet of retail, office, and residential space. The building was originally constructed in 1928 and underwent a substantial renovation between 2016 and 2020. The current record owner is Meridian Gateway Holdings LLC, which acquired the Property on April 14, 2011, for a purchase price of $68,500,000.
Based on our review, title to the Property appears insurable at the proposed acquisition price of $120,000,000, subject to the satisfaction of the requirements set forth in the Preliminary Report and the clearance of certain identified exceptions. Several encumbrances require attention prior to closing, most notably:
(a) An existing mortgage lien in favor of Eastbridge Commercial Bank, N.A., with an estimated outstanding payoff balance of approximately $28,700,000, which must be discharged or addressed through a Consolidation, Extension, and Modification Agreement ("CEMA") structure;
(b) A related UCC-1 Financing Statement filed in favor of Eastbridge Commercial Bank, N.A., covering fixtures and personal property associated with the Property, which must be terminated or assigned in connection with the mortgage discharge or CEMA;
(c) A utility easement in favor of Consolidated Edison Company of New York, Inc. ("Ashford Partners LLC") for vault space beneath the sidewalk adjacent to the Property, which is a standard encumbrance for Manhattan commercial properties and is not expected to impair the use or value of the Property; and
(d) Standard zoning lot restrictions applicable in the C6-4 zoning district, which similarly should not impede the Acquisition.
We recommend that the Title Company be directed to issue an ALTA Owner's Policy of Title Insurance in the amount of $120,000,000 at closing, with the endorsements specified in Section VI.C below, subject to clearance of the requirements and conditions outlined herein. We further recommend the pursuit of a CEMA structure, which could yield approximately $803,600 in mortgage recording tax savings.
This memorandum is intended as a preliminary assessment only. A supplemental title review memorandum will be prepared upon receipt of the updated title continuation, updated ALTA/NSPS survey, and additional diligence materials from Seller's counsel.
II. SCOPE AND METHODOLOGY
In preparing this memorandum, we have reviewed and relied upon the following materials and resources:
1. Preliminary Title Report: The Preliminary Report issued by Granite State Title Insurance Company, dated March 8, 2026, Order No. GST-2026-00613, prepared by Title Officer Martin Clearfield, reflecting a title search through February 28, 2026, for the Property located at 450 West 34th Street, New York, NY 10001 (Block 754, Lot 42, Borough of Manhattan).
2. ACRIS Records: An independent search of the Automated City Register Information System ("ACRIS") maintained by the New York City Department of Finance, Office of the City Register, for Block 754, Lot 42, Manhattan, to cross-reference and verify recorded instruments identified in the Preliminary Report, including deeds, mortgages, satisfactions, UCC filings, and easements.
3. Existing Title Insurance Policy: The existing owner's title insurance policy issued to Meridian Gateway Holdings LLC by Granite State Title Insurance Company, Policy No. GST-2011-04872, dated April 14, 2011, in the insured amount of $68,500,000, which was issued in connection with Meridian's acquisition of the Property.
4. Existing ALTA Survey: The existing ALTA/ACSM Land Title Survey prepared by Clearview Land Surveyors Inc., dated March 2, 2011, certified to Meridian Gateway Holdings LLC, Granite State Title Insurance Company, and Eastbridge Commercial Bank, N.A. We note that this survey is now over fifteen (15) years old and is stale for purposes of the current transaction. A separate survey review memorandum will follow once the survey has been reviewed in detail, and we have recommended that an updated ALTA/NSPS survey be commissioned.
5. Correspondence with Seller's Counsel: We have coordinated with Seller's counsel, Hargrove, Pettigrew & Sloane LLP (Jonathan D. Hargrove, Partner, and Rebecca Tran, Associate), regarding document production for title-related diligence items as set forth in the preliminary due diligence request list transmitted on February 28, 2026. As of the date of this memorandum, Seller's counsel has provided the existing title policy and a copy of the Ashford Partners LLC easement agreement; additional diligence materials remain outstanding.
Limitations: This memorandum addresses the Preliminary Report only and is based on the current state of the title search as reflected therein. It does not address matters that may be disclosed by the updated title continuation, updated survey, violations searches, environmental reports, lease abstracts, or other diligence materials that are still being assembled. A supplemental memorandum will be prepared once all such materials have been received and reviewed. Additionally, this memorandum does not constitute a survey review, zoning analysis, or environmental assessment, each of which is being addressed in separate memoranda by the applicable team members.
III. VESTING AND CHAIN OF TITLE
A. Current Record Owner
The Preliminary Report reflects that the Property is currently held in the name of the following entity:
Meridian Gateway Holdings LLC A New York limited liability company EIN: 27-6831044 Managing Member: Victor S. Papadopoulos Co-Managing Member: Elena K. Rosenberg Principal Office: 1440 Broadway, Suite 2200, New York, NY 10018
Meridian Gateway Holdings LLC was organized under the laws of the State of New York and, based on the Preliminary Report and our independent ACRIS search, has been the record owner of the Property since April 14, 2011. The entity's active status with the New York Secretary of State will need to be confirmed by a certificate of good standing as a condition to closing; we have included this requirement in our title clearance checklist.
B. Vesting Deed
The current vesting deed is a bargain and sale deed with covenant against grantor's acts (the "Vesting Deed"), recorded on April 14, 2011, in the Office of the City Register, New York County, conveying the Property described as Block 754, Lot 42, Borough of Manhattan, to Meridian Gateway Holdings LLC. The Vesting Deed reflects a stated consideration of $68,500,000, consistent with the acquisition price reported in the existing title policy and the New York City Real Property Transfer ("RPT") tax return and New York State transfer tax return, both of which were filed at the time of recording. The grantor under the Vesting Deed was a prior owner entity, and the conveyance appears to have been a standard arm's-length commercial transaction.
The RPT and NYS transfer tax returns filed at the time of recording reflect consideration of $68,500,000, and we have no indication that the actual consideration paid differed from the stated amount. The transfer taxes appear to have been properly computed and paid in connection with the recording.
C. Chain of Title Observations
The Preliminary Report reflects a search of the chain of title for at least the prior forty (40)-year search period, which is consistent with customary title examination standards for commercial real property in New York. Based on our review, the following observations are noted:
(a) No gaps or irregularities were identified in the chain of title. Each transfer in the chain appears to have been made by a grantor who had good record title at the time of conveyance, and each deed was properly executed, acknowledged, and recorded in the Office of the City Register, New York County.
(b) All prior transfers within the forty-year search period were properly recorded, and no break in the chain of title is evident. The descriptions of the Property in each successive deed are consistent, and we identified no discrepancies in the legal description that would raise questions about the identity or boundaries of the parcel being conveyed.
(c) The existing title insurance policy (Policy No. GST-2011-04872), issued by Granite State Title Insurance Company to Meridian Gateway Holdings LLC at the time of its acquisition in 2011, provides additional comfort regarding the state of title prior to April 14, 2011. That policy insured title in the amount of $68,500,000 and, to our knowledge, no claims have been made against it. The existence of this prior policy, combined with our review of the chain of title in the Preliminary Report, supports the conclusion that the chain of title is clear and unbroken.
Based on the foregoing, we do not have concerns regarding the chain of title to the Property, and we believe the vesting in Meridian Gateway Holdings LLC is properly reflected in the public records.
IV. SCHEDULE OF EXCEPTIONS AND ENCUMBRANCES
The Preliminary Report identifies the following exceptions and encumbrances against the Property. Each is discussed in detail below, together with our assessment and recommended actions.
A. Mortgage Lien — Eastbridge Commercial Bank, N.A.
1. Description. The Preliminary Report discloses a mortgage lien encumbering the Property in favor of Eastbridge Commercial Bank, N.A. ("Eastbridge"), a national banking association chartered under federal law and regulated by the Office of the Comptroller of the Currency ("OCC"). The material terms of the mortgage as reflected in the public records are as follows:
• Mortgagor: Meridian Gateway Holdings LLC
• Mortgagee: Eastbridge Commercial Bank, N.A.
• Original Principal Amount: $41,100,000
• Date of Recording: April 14, 2011
• Recording Office: Office of the City Register, New York County (ACRIS)
• Mortgage Type: Commercial mortgage loan
The mortgage was recorded simultaneously with the Vesting Deed conveying the Property to Meridian Gateway Holdings LLC, indicating that the mortgage financing was obtained in connection with Meridian's acquisition of the Property in 2011. The mortgage constitutes a first-priority lien against the Property and must be addressed as a condition to the issuance of an owner's title policy to the Buyer free and clear of this encumbrance.
2. Current Status. Based on preliminary information obtained from Seller's counsel, the estimated current outstanding payoff balance on the Eastbridge mortgage is approximately Twenty-Eight Million Seven Hundred Thousand Dollars ($28,700,000). This figure is approximate and subject to change based on interest accrual, escrow adjustments, and any prepayment premiums or fees that may be applicable under the terms of the loan. A formal payoff letter from Eastbridge will be required to confirm the exact payoff amount, including per diem interest through the anticipated closing date and any applicable prepayment charges.
The Eastbridge mortgage must be satisfied and discharged at or prior to the closing of the Acquisition, or alternatively, assigned and consolidated through a CEMA structure, as discussed in greater detail in Section VII of this memorandum. In either event, the lien must be removed from the title to the Property (or, in the case of a CEMA, consolidated with the new Pinnacle Federal Savings Bank mortgage) so that the Buyer takes title free and clear of the Eastbridge mortgage. We recommend that the payoff letter be requested from Eastbridge no later than thirty (30) days prior to the target closing date of June 30, 2026, to ensure adequate time for review and coordination with the title company.
3. Required Action. The following steps must be taken to address the Eastbridge mortgage lien:
(a) Obtain a formal payoff letter from Eastbridge Commercial Bank, N.A. setting forth the exact payoff amount, per diem interest, wire transfer instructions, and any applicable prepayment charges or administrative fees. The payoff letter should be addressed to Meridian Gateway Holdings LLC (as borrower), with a copy to this firm and to Granite State Title Insurance Company.
(b) Coordinate with Seller and Seller's counsel regarding the payoff or assignment of the mortgage at closing. If a standard payoff is pursued, Eastbridge must deliver a satisfaction of mortgage in recordable form (or authorize the Title Company to record a satisfaction on its behalf) simultaneously with the closing. The satisfaction must be in proper form for recording in the Office of the City Register, New York County.
(c) If a CEMA structure is pursued (as we recommend for mortgage recording tax savings purposes, as described in Section VII), coordinate with Eastbridge regarding the assignment of the existing mortgage to Pinnacle Federal Savings Bank ("Pinnacle"), and confirm that Eastbridge is willing to assign rather than satisfy the mortgage. The CEMA process will require the cooperation of Eastbridge, Pinnacle, and the Seller/Buyer, and will involve the preparation and recording of multiple instruments including an assignment of mortgage, a gap mortgage, and the CEMA instrument itself.
(d) Confirm with the Title Company that either the satisfaction of mortgage or the CEMA assignment, as applicable, is a condition to the issuance of the owner's title policy.
B. UCC-1 Financing Statement — Eastbridge Commercial Bank, N.A.
1. Description. The Preliminary Report also discloses a UCC-1 Financing Statement filed in favor of Eastbridge Commercial Bank, N.A. as secured party, with Meridian Gateway Holdings LLC as debtor (the "Eastbridge UCC-1"). The Eastbridge UCC-1 was filed in connection with the mortgage loan described in Section IV.A above and covers fixtures, equipment, and personal property associated with the Property, including but not limited to building systems, mechanical equipment, HVAC systems, elevators, and other items that are customarily subject to a fixture filing in connection with commercial mortgage loans.
The Eastbridge UCC-1 was filed with the New York County Clerk's Office in accordance with Article 9 of the New York Uniform Commercial Code and, to the extent it constitutes a fixture filing, was also indexed against the real property records for Block 754, Lot 42. The filing appears to be current and has not been terminated or amended as of the date of the Preliminary Report.
2. Required Action. The following steps must be taken to address the Eastbridge UCC-1:
(a) Upon the payoff and discharge of the Eastbridge mortgage, a UCC-3 Termination Statement must be filed by Eastbridge (or its authorized representative) with the New York County Clerk's Office and, to the extent the original filing was made with the New York Secretary of State, with that office as well. The termination statement must reference the original UCC-1 filing number and confirm the full release of Eastbridge's security interest in the fixtures and personal property.
(b) If a CEMA structure is pursued, the UCC-1 may need to be assigned to Pinnacle Federal Savings Bank (the prospective senior lender) and consolidated with a new UCC filing made by Pinnacle in connection with its mortgage loan. The mechanics of the UCC assignment will need to be coordinated with lender's counsel, and a UCC-3 Assignment should be prepared and filed simultaneously with the CEMA instruments.
(c) We will conduct a comprehensive UCC search against Meridian Gateway Holdings LLC with both the New York Secretary of State and the New York County Clerk to confirm that no additional UCC financing statements appear against the Seller or the Property beyond the Eastbridge filing. Any additional filings would need to be investigated and addressed prior to closing.
C. Utility Easement — Consolidated Edison Company of New York, Inc.
1. Description. The Preliminary Report discloses an easement in favor of Consolidated Edison Company of New York, Inc. ("Ashford Partners LLC") for vault space beneath the sidewalk adjacent to the Property (the "Ashford Partners LLC Easement"). The Ashford Partners LLC Easement was recorded in the Office of the City Register, New York County, at Liber 4823, Page 112. This type of easement is a standard utility vault easement commonly found in Manhattan commercial properties, particularly in buildings of the vintage and location of the Property. The easement grants Ashford Partners LLC the right to maintain, access, and utilize subsurface vault space for the installation, maintenance, and operation of electrical utility infrastructure serving the Property and adjacent properties.
2. Assessment. We have reviewed the recorded instrument and offer the following assessment:
(a) The Ashford Partners LLC Easement is limited in scope to subsurface vault and utility infrastructure located beneath the public sidewalk area adjacent to the Property. It does not affect the building footprint, usable floor area, structural integrity of the building, or above-grade use of the Property.
(b) Easements of this nature are ubiquitous in Manhattan commercial real estate and are routinely accepted as permitted exceptions in title insurance policies for properties of this type. The presence of the Ashford Partners LLC Easement is consistent with the standard utility infrastructure arrangements that one would expect for a mixed-use building of this size and location.
(c) The easement should not impair the use, operation, or value of the Property for Buyer's intended purposes. There is no indication that Ashford Partners LLC has exercised any rights under the easement in a manner that has disrupted or interfered with the operation of the Property, and no disputes or litigation relating to the easement were identified in the Preliminary Report.
Recommendation: We recommend that the Ashford Partners LLC Easement be accepted as a standard permitted exception in the owner's title policy, subject to confirmation that the easement area corresponds to the utility vault shown on the existing ALTA survey prepared by Clearview Land Surveyors Inc. (dated March 2, 2011) and on the updated survey to be commissioned. We further recommend the procurement of an ALTA 28.0 (Easement — Damage or Enforced Removal) endorsement to provide additional protection against any future claims by Ashford Partners LLC under the easement that could result in damage to the Property or enforced removal of improvements.
D. Zoning Lot Restrictions
1. Description. The Preliminary Report reflects the standard zoning lot restrictions applicable to the Property as situated in the C6-4 zoning district under the New York City Zoning Resolution. The key zoning parameters are as follows:
The C6-4 district is a high-density commercial district that permits a wide range of commercial and residential uses as-of-right, including the mixed-use configuration of the Property (retail, office, and residential). The maximum FAR of 10.0 applies to both commercial and residential uses, and the Property's existing built square footage of 186,400 SF is within the maximum allowable envelope of 201,250 SF, leaving 14,850 SF of unused development rights.
2. Assessment.
(a) No zoning lot development agreement, zoning lot merger declaration, or restrictive declaration encumbering or limiting the unused development rights was identified in the title search. This is a significant finding, as it indicates that the full 14,850 SF of unused development rights (commonly referred to as "air rights") remain available and unencumbered as of the date of the Preliminary Report.
(b) The existence of 14,850 SF of unused development rights represents potential incremental value to the Buyer. These rights could be utilized for a future expansion or vertical addition to the building (subject to applicable building code, landmarking, and other regulatory requirements), or could potentially be transferred to adjacent lots through a zoning lot merger, subject to the provisions of the New York City Zoning Resolution governing the transfer of development rights. We recommend confirming through ACRIS and the Department of City Planning records that no prior transfer, sale, or encumbrance of these air rights has been recorded.
(c) Grace Nakamura of our office is coordinating a comprehensive zoning analysis with Halcyon Planning Associates LLC (Mark Espinoza, AICP), which will address the zoning parameters in further detail, including the as-of-right status of the existing use, any applicable special district overlays, and the regulatory framework governing the potential utilization or transfer of the unused development rights. That analysis will be presented in a separate memorandum.
Recommendation: We recommend that the standard zoning lot restrictions be accepted as a permitted exception in the owner's title policy. We further recommend confirming that no zoning lot merger, air rights transfer agreement, or restrictive declaration has been filed that would diminish or encumber the unused development rights, as such rights may represent meaningful additional value to the Client.
E. Standard Printed Exceptions
The Preliminary Report includes the standard printed exceptions customarily found in New York preliminary title reports. These exceptions are not specific to the Property but are general conditions that apply to all insured properties unless affirmatively deleted or modified by endorsement or other action. The standard printed exceptions include the following:
(a) Rights of Tenants in Possession: Rights or claims of parties in possession not shown by the public records, including tenants under unrecorded leases. This exception will be addressed through the assignment of existing leases at closing and the procurement of tenant estoppel certificates from major commercial tenants as required by the Purchase and Sale Agreement ("PSA").
(b) Survey Matters: Easements or claims of easements not shown by the public records; encroachments, overlaps, boundary line disputes, and other matters that would be disclosed by an accurate survey and inspection of the Property. This exception will be addressed by the procurement of an updated ALTA/NSPS Land Title Survey, which will be certified to the relevant parties and delivered as a condition to closing. Upon receipt and review of the updated survey, we will request that the Title Company delete or modify this exception as appropriate.
(c) Unpaid Real Estate Taxes: Real estate taxes, assessments, water charges, and sewer rents not yet due and payable. These charges will be prorated between Buyer and Seller at closing as provided in the PSA, and the Title Company will confirm that all taxes and charges have been paid through the closing date or will be covered by the closing proration.
(d) Facts an Accurate Survey Would Show: Any state of facts that an accurate survey of the Property would reveal. This exception overlaps with the survey matters exception and will similarly be addressed upon receipt of the updated survey. We will request deletion of this exception upon delivery of a survey satisfactory to the Title Company.
(e) Mechanic's Liens: Mechanic's liens or claims of lien arising from recent construction, alteration, or renovation work performed at the Property. Seller will be required to provide a mechanics' lien affidavit and, if applicable, lien waivers from all contractors, subcontractors, and materialmen who performed work at the Property within the statutory lien filing period.
These standard exceptions are addressed through customary closing deliverables and procedures and will be discussed further in the context of PSA negotiation strategy. We do not anticipate that any of these exceptions will present a material obstacle to closing, provided the requisite deliverables are timely obtained.
V. MATTERS NOT APPEARING AS EXCEPTIONS BUT REQUIRING VERIFICATION
In addition to the specific exceptions and encumbrances identified in the Preliminary Report, certain matters require independent verification to confirm the absence of adverse title conditions. These matters are discussed below.
A. Real Estate Tax Liens
The Property is classified as Tax Class 4 (commercial property) for New York City real property tax purposes. The material tax information is as follows:
• Current FY 2025/2026 Real Estate Taxes: Approximately $2,640,000 per annum.
• Tentative FY 2026/2027 Assessed Value: $48,200,000 (Tax Class 4).
We must confirm that all real estate taxes, water charges, and sewer rents assessed against the Property are current and paid through the closing date, with appropriate prorations to be addressed in the PSA. Any outstanding or delinquent taxes would constitute a lien against the Property and would need to be satisfied prior to closing. The Preliminary Report does not reflect any delinquent real estate tax liens, but we will obtain a tax search or lien letter from the New York City Department of Finance to confirm this independently.
Additionally, we must confirm whether any tax certiorari proceeding is currently pending or has been recently filed with respect to the Property. A pending tax certiorari proceeding could result in a retroactive adjustment of the assessed value and a corresponding refund or additional assessment, which would need to be addressed in the PSA proration provisions. Our preliminary indication from Seller's counsel is that no tax certiorari proceeding is pending, but this must be formally verified through diligence.
B. Judgments and Liens Against Seller
A judgment and lien search must be conducted against Meridian Gateway Holdings LLC as the record owner and contract seller, and, to the extent relevant under New York practice, against its managing members Victor S. Papadopoulos and Elena K. Rosenberg. The following searches are required:
(a) Judgment search in New York County (Supreme Court and Civil Court) and federal court (United States District Court for the Southern District of New York) for any money judgments, judgment liens, or other adverse filings against Meridian Gateway Holdings LLC, Victor S. Papadopoulos, or Elena K. Rosenberg.
(b) Federal tax lien search (IRS) — The Preliminary Report does not identify any federal tax liens against Meridian Gateway Holdings LLC or the Property. This must be confirmed through an updated search with the Internal Revenue Service and the Office of the City Register closer to the anticipated closing date.
(c) New York State tax warrant search — The Preliminary Report does not identify any tax warrants issued by the New York State Department of Taxation and Finance against Meridian Gateway Holdings LLC. This also must be confirmed through an updated search.
If any judgments or liens are identified, they would constitute adverse title matters that would need to be satisfied or otherwise addressed prior to closing. We will coordinate these searches as part of the overall entity-level diligence for the Seller.
C. Pending Litigation / Lis Pendens
No lis pendens has been identified against Block 754, Lot 42 in the Preliminary Report. A lis pendens, if filed, would provide constructive notice of pending litigation affecting the Property and could constitute a cloud on title. The absence of any lis pendens is a favorable finding, but we will monitor the public records for any intervening filings between the date of the Preliminary Report and the closing date through the title continuation update.
A broader litigation search against Meridian Gateway Holdings LLC is being conducted as part of the entity-level due diligence for the transaction and will be addressed in a separate memorandum being prepared by Grace Nakamura. Any pending litigation against the Seller that could result in a judgment lien, attachment, or other adverse effect on the Property would need to be evaluated in the context of the title review.
D. Violations. The Preliminary Report does not reflect open violations issued by the New York City Department of Buildings ("DOB"), the Environmental Control Board ("ECB"), the Department of Housing Preservation and Development ("HPD"), or the Fire Department of the City of New York ("FDNY"). This is because violations searches are generally conducted as a separate workstream from the title search and are not typically reflected in a preliminary title report.
A comprehensive violations and compliance search has been ordered and is the subject of a separate memorandum. We note, however, that open violations—particularly DOB or ECB violations carrying civil penalties or stop-work orders—may affect the title insurability of the Property or may require indemnification from the Seller in the PSA. We will coordinate the results of the violations search with the title review to identify any potential title implications.
E. Rights of Tenants in Possession
The Property is a mixed-use building with multiple tenancy arrangements that must be considered in connection with the title review. The current tenant roster includes the following:
Retail Tenants:
• Harmon & Voss Retail Partners LLC (ground floor and cellar retail space)
• Solstice Wellness Studio Inc. (ground floor retail/service space)
Office Tenants:
• Ridgepoint Consulting Group LLC
• Calderon Specialty Insurance Digital Media Corp.
• Various tenants occupying Floors 8 and 9
Residential Tenants:
• Thirty-eight (38) residential rental units on the upper floors of the building
Overall occupancy of the Property is reported at approximately 87.4%.
The rights of tenants in possession under their respective leases constitute possessory interests in the Property that will be reflected as exceptions to the Buyer's title. Under New York law, the interests of tenants in possession may not be fully reflected in the public records (particularly where leases are unrecorded or where lease amendments, extensions, or renewal options have been granted orally or by informal writing), and the Title Company will except from coverage any rights or claims of parties in possession unless affirmative steps are taken.
To address this exception, the PSA should require the Seller to deliver tenant estoppel certificates from the major commercial tenants, in form and substance reasonably satisfactory to the Buyer and its lender, confirming the material terms of their respective leases, the absence of defaults, and the status of any security deposits, prepaid rents, or other tenant credits. The number and identity of tenants from whom estoppel certificates will be required should be negotiated in the PSA, with priority given to the largest commercial tenants by square footage and rent.
With respect to the residential tenants, we note that the residential units may be subject to rent regulation under the Housing Stability and Tenant Protection Act of 2019 ("HSTPA") and the applicable provisions of the New York City Rent Stabilization Code. The rent regulatory status of the residential units, and the implications of any rent-regulated tenancies for the transaction, will be analyzed separately as part of the lease diligence workstream. Any rent-regulated tenancies would carry with them certain statutory tenant protections (including limitations on rent increases, restrictions on eviction, and succession rights) that cannot be overridden by the PSA and that the Buyer should understand prior to closing.
VI. OWNER'S TITLE INSURANCE POLICY — REQUIREMENTS AND ENDORSEMENTS
A. Proposed Policy
We recommend that the following owner's title insurance policy be issued at closing:
• Issuer: Granite State Title Insurance Company (Title Officer: Martin Clearfield)
• Insured: BFO 450 West 34th LLC (the Acquisition SPV; a Delaware limited liability company, sole member: Briarwood Family Office LLC)
• Policy Amount: $120,000,000 (equal to the Purchase Price)
• Policy Type: ALTA Owner's Policy of Title Insurance (2006 Form, or current form as amended for use in the State of New York)
The existing title insurance policy (Policy No. GST-2011-04872), issued to Meridian Gateway Holdings LLC in 2011, insured title in the amount of $68,500,000. The new owner's policy will provide coverage at the full acquisition price of $120,000,000, reflecting the current transaction value. The policy will insure the Buyer's fee simple interest in the Property, subject only to the Permitted Exceptions agreed upon in the PSA and the standard conditions and exclusions of the ALTA Owner's Policy form.
We note that Pinnacle Federal Savings Bank, as the prospective senior lender, will also require a separate ALTA Loan Policy of Title Insurance with its own set of endorsements insuring the priority and validity of its mortgage lien. Coordination with Pinnacle's outside counsel regarding the loan policy requirements will follow once counsel has been identified and engaged.
B. Title Clearance Requirements (Conditions to Issuance)
The Title Company has identified the following requirements that must be satisfied as conditions to the issuance of the owner's title policy:
1. Mortgage Satisfaction or Assignment: Satisfaction or assignment (via CEMA) of the mortgage in favor of Eastbridge Commercial Bank, N.A., currently recorded against the Property, so that the Buyer takes title free and clear of the Eastbridge mortgage lien (or, in the case of a CEMA, so that the Eastbridge mortgage is consolidated with the new Pinnacle mortgage as a single first-priority lien).
2. UCC-3 Termination or Assignment: Filing of a UCC-3 Termination Statement (or UCC-3 Assignment, if a CEMA is pursued) for the Eastbridge UCC-1 Financing Statement, confirming the release or transfer of Eastbridge's security interest in the fixtures and personal property associated with the Property.
3. Updated ALTA/NSPS Survey: Delivery of an updated ALTA/NSPS Land Title Survey prepared by Clearview Land Surveyors Inc. (or a substitute surveyor approved by the Title Company), incorporating full Table A optional survey items, and certified to BFO 450 West 34th LLC, Briarwood Family Office LLC, Granite State Title Insurance Company, and Pinnacle Federal Savings Bank. The survey must reflect the current state of the Property, including any improvements, encroachments, easements, and other survey matters.
4. Title Affidavit / Owner's Affidavit: Delivery of a title affidavit and owner's affidavit from Meridian Gateway Holdings LLC, executed by its managing member(s), confirming (among other things) that there are no additional liens, encumbrances, or unrecorded interests affecting the Property; that no work has been performed at the Property that could give rise to a mechanic's lien (or, if work has been performed, that all contractors and suppliers have been paid in full and appropriate lien waivers have been obtained); and that no parties are in possession of the Property other than existing tenants under disclosed leases.
5. Mechanics' Lien Affidavit and Lien Waiver: Delivery of a mechanics' lien affidavit from Meridian Gateway Holdings LLC, and, if any construction, renovation, or capital improvement work has been performed at the Property within the applicable statutory lien period, delivery of unconditional lien waivers from all contractors, subcontractors, and materialmen.
6. Seller's Good Standing and Authority: Delivery of a certificate of good standing for Meridian Gateway Holdings LLC from the New York Secretary of State, together with a certified copy of the entity's operating agreement or managing member resolutions authorizing the sale of the Property and the execution and delivery of all closing documents. The Title Company must be satisfied that the individuals executing closing documents on behalf of Meridian have the authority to do so.
7. Tax Clearances: Payment of all real estate taxes, water charges, and sewer rents assessed against the Property through the date of closing, or provision for appropriate prorations at closing as set forth in the PSA. The Title Company will require evidence that all such charges have been paid or will be paid from closing proceeds.
8. Recording of Deed: Recording of the bargain and sale deed (or other appropriate conveyance instrument) conveying the Property from Meridian Gateway Holdings LLC to BFO 450 West 34th LLC in the Office of the City Register, New York County. The deed must be in proper form for recording and must be accompanied by all required transfer tax returns and supporting documentation.
9. Transfer Taxes: Payment of all applicable transfer taxes in connection with the conveyance, including:
(i) New York City Real Property Transfer Tax (RPT): At the applicable rate for commercial property transfers over $500,000, the RPT is estimated at $3,150,000 based on the $120,000,000 Purchase Price (2.625% of consideration).
(ii) New York State Transfer Tax: At the applicable rate of $0.65 per $100 of consideration (or portion thereof), the NYS transfer tax is estimated at $780,000 based on the $120,000,000 Purchase Price.
(iii) Total Estimated Transfer Taxes: $3,930,000 ($3,150,000 + $780,000). Under the anticipated terms of the PSA, transfer taxes are expected to be the obligation of the Seller, consistent with customary practice in New York City commercial real estate transactions. This allocation should be confirmed and clearly stated in the PSA.
C. Recommended Endorsements
We recommend the procurement of the following endorsements to the owner's title policy, subject to availability and pricing confirmation from the Title Company:
1. ALTA 9.0 — Comprehensive (Restrictions, Encroachments, Minerals): This endorsement provides expanded coverage against losses arising from violations of covenants, conditions, and restrictions; encroachments of improvements onto adjacent property or easements; and adverse claims based on ownership of minerals or subsurface resources. It is a standard endorsement for commercial transactions of this type.
2. ALTA 3.1 — Zoning: This endorsement confirms that the Property complies with the applicable zoning ordinance (C6-4 zoning district) and that the existing use of the Property as a mixed-use building (retail, office, and residential) is a permitted use under the zoning ordinance. It also confirms the applicable FAR, lot area, height and setback requirements, and parking requirements, if any. This endorsement provides important protection to the Buyer in the event of a challenge to the as-of-right status of the existing use.
3. ALTA 17.0 — Access: This endorsement confirms that the Property has legal access to and from a public right-of-way, specifically West 34th Street. Access is a fundamental requirement for the use and operation of the Property, and this endorsement provides insurance against any claim that the Property lacks legal access.
4. ALTA 19.0 — Contiguity: If the Property consists of multiple parcels or lots that have been merged or assembled, this endorsement confirms that the parcels are contiguous. Based on our initial review, the Property appears to be a single tax lot (Block 754, Lot 42), but we will confirm the lot configuration and determine whether this endorsement is applicable and necessary.
5. ALTA 25.0 — Same as Survey: This endorsement confirms that the legal description of the Property set forth in the title policy corresponds to and is the same as the property depicted on the ALTA/NSPS survey. This endorsement provides comfort that there is no discrepancy between the title description and the survey description.
6. ALTA 28.0 — Easement — Damage or Enforced Removal: This endorsement provides coverage against loss or damage resulting from the exercise of rights under existing easements (specifically, the Ashford Partners LLC vault easement) that could result in damage to the building or improvements or require the enforced removal of any portion of the building. Given the presence of the Ashford Partners LLC Easement, this endorsement is advisable.
7. Tax Parcel Endorsement: This endorsement confirms that the Property constitutes a single, separately assessed tax parcel identified as Block 754, Lot 42 in the records of the New York City Department of Finance. This endorsement provides protection against claims that the Property has been subdivided or that the tax parcel identification does not correspond to the legal description.
8. ALTA 35.0 — Minerals and Subsurface: If available in New York, this endorsement provides expanded coverage against losses arising from the extraction or development of minerals or subsurface resources. Availability in New York should be confirmed with the Title Company, as this endorsement is not universally offered in all jurisdictions.
9. Creditors' Rights Endorsement: If required by Pinnacle Federal Savings Bank as a condition of the mortgage loan, this endorsement modifies the standard creditors' rights exclusion in the title policy to provide affirmative coverage against title defects arising from the application of creditors' rights, bankruptcy, insolvency, or similar laws. The requirement for this endorsement should be confirmed with the lender and lender's counsel.
10. Fairway Endorsement (New York Form) — Non-Imputation: Given the SPV structure of the Acquisition (with BFO 450 West 34th LLC as a single-purpose entity wholly owned by Briarwood Family Office LLC), a non-imputation endorsement may be appropriate to ensure that knowledge of title defects held by the Seller or its principals is not imputed to the Buyer entity. The applicability and form of this endorsement should be discussed with the Title Company.
We will confirm the availability, form, and premium pricing of each of the above endorsements with Martin Clearfield at Granite State Title Insurance Company and will provide an updated schedule of endorsements with cost estimates prior to closing.
VII. CEMA OPPORTUNITY AND MORTGAGE RECORDING TAX ANALYSIS
A. CEMA Overview
Under New York law, a Consolidation, Extension, and Modification Agreement ("CEMA") is a mechanism by which an existing mortgage can be assigned by the current lender to a new lender, rather than being satisfied and discharged, and then consolidated with a new supplemental ("gap") mortgage into a single consolidated first-priority lien. The primary benefit of a CEMA is the avoidance of mortgage recording tax on the portion of the new mortgage loan that corresponds to the assigned existing mortgage balance. Mortgage recording tax in New York City is imposed at the rate of 2.80% (comprising the basic state tax and the additional city tax) on the principal amount of each new mortgage recorded, subject to certain limited exemptions. By utilizing a CEMA structure, the new mortgage recording tax is payable only on the incremental "new money" portion of the loan—i.e., the difference between the new mortgage amount and the assigned existing mortgage balance.
The CEMA structure requires the cooperation of three parties: (i) the existing lender (Eastbridge Commercial Bank, N.A.), which must agree to assign its mortgage rather than satisfy it; (ii) the new lender (Pinnacle Federal Savings Bank), which must agree to accept the assignment of the existing mortgage and consolidate it with its new gap mortgage; and (iii) the borrower/property owner, who executes the CEMA and gap mortgage instruments.
B. Tax Savings Calculation
Based on the anticipated terms of the Pinnacle mortgage loan and the estimated payoff balance of the Eastbridge mortgage, the mortgage recording tax savings achievable through a CEMA structure are calculated as follows:
The potential mortgage recording tax savings of $803,600 represent a significant cost reduction and strongly support the pursuit of a CEMA structure. Even accounting for administrative and processing fees that Eastbridge may charge for its cooperation in the assignment (typically ranging from $5,000 to $25,000 for commercial transactions), the net savings remain highly material.
C. Requirements for CEMA
The following steps and conditions must be satisfied in order to effectuate a CEMA closing:
(a) Eastbridge Cooperation: Eastbridge Commercial Bank, N.A. must agree to assign (rather than satisfy) its existing mortgage. Eastbridge will typically charge an administrative or processing fee for its cooperation. Early outreach to Eastbridge is recommended to confirm the bank's willingness to participate and to ascertain the processing timeline, applicable fees, and any documentation requirements.
(b) Pinnacle Consent: Pinnacle Federal Savings Bank, as the prospective new lender, must consent to and participate in the CEMA structure. Specifically, Pinnacle must agree to accept the assignment of the existing Eastbridge mortgage, execute a gap mortgage for the "new money" amount of $49,300,000, and enter into the CEMA instrument consolidating the assigned mortgage and the gap mortgage into a single first-priority lien of $78,000,000.
(c) CEMA Documentation: The following instruments must be prepared and recorded:
(i) Assignment of Mortgage from Eastbridge Commercial Bank, N.A. to Pinnacle Federal Savings Bank;
(ii) Gap Mortgage and Gap Mortgage Note from BFO 450 West 34th LLC (or Meridian Gateway Holdings LLC, depending on closing sequence) to Pinnacle Federal Savings Bank in the amount of $49,300,000;
(iii) Consolidation, Extension, and Modification Agreement consolidating the assigned mortgage and the gap mortgage into a single first-priority lien in the amount of $78,000,000; and
(iv) UCC-3 Assignment (assigning the existing Eastbridge UCC-1 to Pinnacle) and new UCC-1 Financing Statement (to the extent required by Pinnacle).
(d) Title Company Approval: The Title Company must approve the CEMA structure and confirm that it will insure the consolidated mortgage as a valid first-priority lien against the Property.
(e) Coordination with Overall Closing: The CEMA closing must be carefully coordinated with the overall acquisition closing to ensure that the assignment, gap mortgage, and CEMA are recorded in the correct sequence and that no gap in coverage arises.
A separate memorandum on the existing financing review and CEMA feasibility analysis is currently being prepared, and a draft CEMA request letter to Eastbridge is also in process.
D. Recommendation. We strongly recommend pursuing the CEMA structure in connection with this transaction given the significant potential savings of $803,600 in mortgage recording tax. To advance this objective, the following immediate steps are recommended:
(a) Confirm with Pinnacle Federal Savings Bank (Daniel Ortega, Senior Vice President, Commercial Real Estate Lending, 245 Park Avenue, 12th Floor, New York, NY 10167) and its outside counsel that the bank is willing to participate in a CEMA closing and will accept the assignment of the Eastbridge mortgage.
(b) Initiate early outreach to Eastbridge Commercial Bank, N.A. to confirm its cooperation in the CEMA assignment, ascertain applicable fees and processing timelines, and obtain the name and contact information of the bank officer responsible for processing CEMA requests.
(c) Coordinate with Seller's counsel (Hargrove, Pettigrew & Sloane LLP) to ensure that the PSA contemplates and facilitates the CEMA structure, including Seller's obligation to cooperate in the assignment of the existing mortgage.
VIII. TITLE ISSUES REQUIRING ATTENTION IN PSA NEGOTIATIONS
The following title-related issues should be addressed in the negotiation and drafting of the Purchase and Sale Agreement for the Acquisition.
A. Seller's Obligation to Deliver Marketable and Insurable Title
The PSA should contain a clear and unambiguous covenant by the Seller (Meridian Gateway Holdings LLC) to deliver good, marketable, and insurable fee simple title to the Property at closing, free and clear of all liens, encumbrances, leases, tenancies, and exceptions other than the specifically enumerated "Permitted Exceptions" defined in the PSA. The title delivery covenant should be a condition precedent to the Buyer's obligation to close and should expressly reference the requirement that Granite State Title Insurance Company (or another nationally recognized title insurer acceptable to the Buyer) be prepared to issue the owner's title policy described in Section VI above, subject only to the Permitted Exceptions.
The PSA should also require the Seller to use commercially reasonable efforts (or, if negotiable, best efforts) to cure any title defects that are not Permitted Exceptions, and should provide for the consequences of a failure to cure, as discussed below.
B. Permitted Exceptions
Based on our review of the Preliminary Report, we recommend that the following items be designated as "Permitted Exceptions" in the PSA:
1. The Ashford Partners LLC easement for vault space beneath the sidewalk, as recorded at Liber 4823, Page 112, Office of the City Register, New York County.
2. Standard zoning lot restrictions applicable to the Property in the C6-4 zoning district under the New York City Zoning Resolution, including applicable FAR, height, setback, use, and other bulk regulations.
3. Rights of tenants in possession under existing leases, as to be assigned to the Buyer at closing pursuant to the assignment and assumption of leases to be delivered as a closing deliverable.
4. Real estate taxes, water charges, and sewer rents not yet due and payable as of the closing date, subject to proration between Buyer and Seller at closing.
5. Standard utility company easements of record that do not materially impair the use, occupancy, or value of the Property.
Any encumbrance, lien, or exception not specifically listed as a Permitted Exception should be treated as a title defect that the Seller is obligated to cure prior to closing. In particular, the Eastbridge mortgage and related UCC-1 are not Permitted Exceptions and must be satisfied, discharged, or addressed through a CEMA at or prior to closing.
C. Title Cure Period
The PSA should provide the Seller with a reasonable title cure period within which to remove or cure any title defects identified during diligence that are not Permitted Exceptions. Consistent with customary practice in New York City commercial real estate transactions, we recommend a cure period of thirty (30) days from the date of written notice of the title defect. The PSA may also provide for an optional extension of the cure period (e.g., an additional fifteen (15) days) at the Seller's election, subject to the constraint that any extension not cause the closing to occur beyond the outside date established in the PSA.
If the Seller is unable or unwilling to cure a title defect within the cure period (as may be extended), the Buyer should have the right, at its sole election, to: