PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Angela Fontaine, Partner, Real Estate
FROM: Cynthia Ho, Associate, Real Estate
DATE: March 18, 2026
RE: PSA Negotiation Issues List and Strategy Memorandum — Prospective Acquisition of 450 West 34th Street, New York, NY 10001 by BFO 450 West 34th LLC from Meridian Gateway Holdings LLC
MATTER NO.: 1026-00003
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I. PURPOSE AND EXECUTIVE SUMMARY
This memorandum identifies and analyzes the key negotiation issues anticipated in drafting the Purchase and Sale Agreement ("PSA") for Briarwood Family Office LLC's ("Briarwood" or "BFO") proposed acquisition of the mixed-use property located at 450 West 34th Street, New York, NY 10001 (Block 754, Lot 42, Borough of Manhattan) (the "Property") from Meridian Gateway Holdings LLC ("Seller" or "Meridian"). The Property is a 186,400-gross-square-foot mixed-use building comprising ground-floor retail, multi-tenant office space, and 38 residential rental units. The memorandum is intended to serve as a comprehensive roadmap for the drafting team and as a reference tool during negotiations with Seller's counsel.
The Letter of Intent ("LOI") between the parties was executed on March 14, 2026. Our target for PSA execution is April 11, 2026, which gives us approximately three and a half weeks to circulate an initial draft, exchange redlines with Seller's counsel, and resolve all material open points. Given the scope and complexity of the transaction, this timeline is aggressive but achievable, provided we receive timely engagement from Seller's counsel on key issues.
The acquiring entity will be BFO 450 West 34th LLC, a to-be-formed single-purpose Delaware limited liability company wholly owned by Briarwood Family Office LLC. The formation documents are currently being prepared, and we expect the Certificate of Formation to be filed with the Delaware Secretary of State prior to PSA execution. The entity will be structured to satisfy the single-purpose entity and separateness covenants required by Pinnacle Federal Savings Bank in connection with the proposed $78,000,000 senior acquisition mortgage.
The purchase price for the Property is $120,000,000, payable all cash to Seller at closing, subject to customary prorations and adjustments. This represents a price per square foot (based on gross building area) of approximately $643.78 and an implied capitalization rate of 5.80% based on an annualized in-place net operating income of $6,960,000.
The PSA will be drafted in Buyer's form by our office, Calderwood & Harkness LLP, and submitted to Seller's counsel, Hargrove, Pettigrew & Sloane LLP (Jonathan D. Hargrove and Rebecca Tran). Governing law for the PSA will be New York. We have previously worked with Mr. Hargrove on two transactions (the 2023 Archer & Blackwood portfolio sale and the 2024 Cobalt Realty refinancing), and we expect a professional and largely predictable negotiation dynamic. Ms. Tran, who will handle the day-to-day redline exchanges, is known to us from prior matters as well.
This memorandum is organized by anticipated PSA article and section. For each substantive area, the memorandum states the LOI baseline (where applicable), identifies anticipated areas of Seller pushback, and recommends our initial negotiation position along with acceptable fallback positions. A summary negotiation matrix is included in Section XXII for quick reference during negotiation sessions.
All figures, calculations, and analyses contained herein are based on currently available information and are subject to revision as additional data is received during the due diligence process. This memorandum has been prepared for internal use only and is protected by the attorney-client privilege and the attorney work product doctrine.
II. PARTIES AND ACQUISITION VEHICLE
A. Buyer. The acquiring entity will be BFO 450 West 34th LLC, to be formed as a Delaware limited liability company. The sole member of BFO 450 West 34th LLC will be Briarwood Family Office LLC, a New York limited liability company controlled by the Ashworth-Levine family. The decision to use a single-purpose Delaware LLC as the acquiring vehicle is driven by several considerations, including liability isolation from other Briarwood assets, lender requirements for separateness provisions, and the favorable business entity laws of the State of Delaware.
The Certificate of Formation for BFO 450 West 34th LLC is to be filed with the Delaware Secretary of State prior to PSA execution. We have engaged our corporate colleagues to prepare the formation documents, including a limited liability company agreement containing the single-purpose entity and separateness covenants that Pinnacle Federal Savings Bank will require in connection with the proposed acquisition financing. An Employer Identification Number (EIN) will be obtained from the IRS promptly following formation.
The PSA should include standard designee/nominee language permitting Briarwood to assign its rights and obligations under the PSA to BFO 450 West 34th LLC at or prior to closing without the need for Seller's consent. This is a customary provision in transactions where the purchasing principal has not yet formed the final acquisition vehicle at the time of PSA execution. The designee/nominee clause should provide that notwithstanding any such assignment, Briarwood Family Office LLC shall remain fully liable for all of Buyer's obligations under the PSA. This guaranty of the acquiring entity's obligations should be sufficient to address any credit concerns Seller may raise regarding the assignment.
The SPV's limited liability company agreement will include standard separateness provisions required by Pinnacle Federal Savings Bank, including but not limited to: maintenance of separate books and records, separate bank accounts, and adequate capitalization; prohibition on commingling of assets with those of any affiliate; prohibition on guaranteeing or assuming the obligations of any other entity; requirement that the SPV hold itself out as a separate legal entity; and inclusion of at least one independent manager whose consent is required for voluntary bankruptcy filings. These provisions are non-negotiable from the lender's perspective and do not directly affect the PSA terms, but they inform the structure of the assignment and assumption provisions.
B. Seller. The Seller is Meridian Gateway Holdings LLC, a New York limited liability company (EIN 27-6831044), with its principal place of business at 1440 Broadway, Suite 2200, New York, NY 10018. Meridian has held fee simple title to the Property since its acquisition in April 2011 and is the sole owner of record.
The Managing Members of Meridian are Victor S. Papadopoulos and Elena K. Rosenberg. Based on our preliminary review of publicly available filings, we understand that Meridian is managed by its Managing Members, with day-to-day property management delegated to Atlas Urban Management Corp. under a separate management agreement. We have not yet reviewed Meridian's operating agreement and do not yet know whether there are any non-managing members or minority interest holders whose consent may be required for the sale.
Accordingly, the PSA must require the following deliveries with respect to Seller's authority:
(a) Delivery of the operative provisions of Meridian's limited liability company operating agreement (including any amendments) confirming the Managing Members' authority to execute the PSA and consummate the sale of the Property without the need for additional member approvals or consents;
(b) A duly executed member consent or resolution of the members of Meridian authorizing the transaction, the execution and delivery of the PSA and all closing documents, and the performance of Meridian's obligations thereunder; and
(c) A representations and warranties certificate executed by both Victor S. Papadopoulos and Elena K. Rosenberg, in their individual capacities as Managing Members, confirming their authority to act on behalf of Meridian and representing that all necessary member approvals have been obtained.
The requirement for a personal certificate from both Managing Members is an important protective measure. In multi-member LLCs, questions of authority can arise post-closing, particularly if there are passive investors or minority members who may claim they were not properly notified or that the sale required a supermajority vote. The personal certificate, while not creating individual liability for the substance of the PSA representations, confirms the signatories' authority and provides an additional layer of accountability. We anticipate that Seller's counsel may resist the personal certificate as overreaching; if so, we should at a minimum require delivery of a fully executed member consent accompanied by a certification from Seller's counsel as to its validity.
C. Assignment Provisions
We recommend that the PSA include the following assignment framework:
(a) Permitted Assignments: Buyer may assign the PSA to any affiliate of Buyer (defined to include any entity directly or indirectly controlled by, controlling, or under common control with Briarwood Family Office LLC or the Ashworth-Levine family) without the prior written consent of Seller, provided that (i) Buyer delivers written notice of such assignment to Seller at least five (5) business days prior to the anticipated closing date, (ii) the assignee assumes all of Buyer's obligations under the PSA pursuant to a written assumption agreement, and (iii) Buyer (or Briarwood Family Office LLC) remains jointly and severally liable for all of Buyer's obligations under the PSA.
(b) Restricted Assignments: All other assignments of Buyer's rights or obligations under the PSA shall require the prior written consent of Seller, which consent may be withheld in Seller's sole and absolute discretion.
(c) No Release: No assignment (whether permitted or consented to) shall release the assigning party from its obligations under the PSA unless expressly agreed in writing by Seller.
We anticipate that Seller's counsel will push for a blanket anti-assignment clause prohibiting any assignment without Seller's consent. Our position is that intra-family office transfers must be permitted as a matter of course, as Briarwood routinely structures acquisitions through multiple affiliated entities for tax, estate planning, and liability management purposes. The requirement that Briarwood remain liable for all Buyer obligations after any such assignment should adequately address any credit or performance concerns on Seller's part. If Seller insists on a consent right even for affiliate transfers, we should propose that such consent not be unreasonably withheld, conditioned, or delayed, and that any failure to respond within five (5) business days of a written request shall be deemed consent.
III. PURCHASE PRICE AND PAYMENT
A. Purchase Price
The purchase price for the Property is $120,000,000 (One Hundred Twenty Million Dollars), payable all cash to Seller at closing, subject to customary prorations and adjustments as described in Section VIII of this memorandum.
For reference, the key pricing metrics are as follows:
The purchase price was negotiated at the LOI stage and is not subject to further adjustment except as provided in the customary prorations and adjustments provisions of the PSA. The LOI does not provide for any purchase price adjustment based on occupancy, rent roll, or NOI changes between the LOI date and closing. We do not recommend introducing a purchase price adjustment mechanism, as it would add complexity and likely be resisted by Seller. Instead, the appropriate protections for Buyer are captured through the due diligence free-look right (permitting termination during the DD period if the financial performance of the Property is not as expected) and the closing condition requiring no material adverse change in the tenant rent roll between PSA execution and closing.
B. Deposit Structure
The deposit structure, as reflected in the LOI and to be memorialized in the PSA, is as follows:
Initial Earnest Money Deposit. Buyer shall deposit the sum of $6,000,000 (Six Million Dollars), representing 5% of the purchase price, within three (3) business days of PSA execution, into escrow with Prestige Escrow Services LLC (1 Penn Plaza, Suite 4500, New York, NY 10119). If the PSA is executed on April 11, 2026 (a Saturday — note: we should confirm execution on a business day; if executed Friday, April 10, or Monday, April 13, the deposit due date adjusts accordingly), the Initial Deposit would be due no later than April 16, 2026.
Additional Deposit. Buyer shall deposit an additional $3,000,000 (Three Million Dollars) within one (1) business day after the expiration of the Due Diligence Period. Assuming a PSA execution date of April 11, 2026 and a 45-calendar-day Due Diligence Period expiring May 26, 2026, the Additional Deposit would be due on or before May 27, 2026.
Total Deposits: The aggregate of the Initial Deposit and the Additional Deposit is $9,000,000 (Nine Million Dollars), or 7.5% of the purchase price.
All deposits shall be held in an interest-bearing escrow account maintained by Prestige Escrow Services LLC. Interest earned on the deposits shall follow the deposits — that is, interest accrues for the benefit of the party ultimately entitled to receive the deposits (Buyer in the event of a refund, Seller in the event of forfeiture as liquidated damages, or credited against the purchase price at closing).
Negotiation Issue — "Hard" Deposits. We anticipate that Seller will push for the deposits to become "hard" (i.e., non-refundable) upon expiration of the Due Diligence Period, regardless of the reason for any subsequent failure to close. Our position, which is consistent with the LOI and standard market practice for transactions of this size and nature, is as follows:
(i) During the Due Diligence Period, the Initial Deposit is fully refundable upon Buyer's exercise of its termination right for any reason or no reason (the "free-look" right);
(ii) Upon expiration of the Due Diligence Period without Buyer's exercise of the termination right, the Additional Deposit becomes due;
(iii) The deposits become non-refundable only in the event of a Buyer default occurring after expiration of the Due Diligence Period — that is, the deposits are "at risk" only if Buyer wrongfully refuses or fails to close;
(iv) Buyer retains the right to a full refund of all deposits in the event of: (a) failure of a closing condition not caused by Buyer's breach, (b) Seller default, (c) a material casualty or condemnation event triggering Buyer's termination right, or (d) termination by either party due to a mutual condition failure; and
(v) If the transaction includes any financing contingency (which we do not recommend — see Section XII.A), deposits should not be at risk upon a financing contingency failure.
If Seller insists that deposits go fully hard upon DD expiration, our fallback position is to accept that formulation only with express carve-outs for Seller default, failure of a Seller closing condition, and casualty/condemnation termination events. We should not agree to a structure where Buyer loses its deposits due to Seller's own failure to perform.
Escrow Provisions. The PSA should include detailed escrow instructions, to be appended as an exhibit to the PSA or incorporated into the escrow article. The escrow instructions should address the following:
• Identity of the escrow agent (Prestige Escrow Services LLC) and the designated account;
• Conditions for release of escrow funds (mutual written instructions of Buyer and Seller, or a final non-appealable court order);
• Dispute resolution: if the parties cannot agree on disposition of the escrow funds, the escrow agent shall have the right to interplead the funds into the Supreme Court of the State of New York, County of New York, and shall be released from all further liability upon such interpleader;
• Escrow agent liability limitations: escrow agent shall not be liable for any loss of escrow funds except in the event of its own gross negligence or willful misconduct; escrow agent may rely on the genuineness of any document or signature presented to it;
• Investment of escrow funds: funds to be invested in a federally insured interest-bearing account or money market fund; escrow agent shall not be liable for any loss of investment value;
• Tax reporting: Buyer's tax identification number to be used for reporting interest income on the escrow funds; and
• Signatures required for release: release of escrow funds shall require the joint written instruction of both Buyer and Seller (or their respective counsel), except as otherwise provided in the PSA.
C. Balance Due at Closing
The balance of the purchase price due at closing shall be:
$120,000,000 (Purchase Price) – $9,000,000 (Aggregate Deposits, inclusive of accrued interest applied against the purchase price) ± Prorations and adjustments (see Section VIII) = Approximately $111,000,000
The balance shall be delivered by wire transfer of immediately available federal funds to an account designated by Seller (or Seller's counsel) no later than 2:00 PM Eastern Time on the closing date. The PSA should specify the wire instructions for the closing proceeds, including the requirement that Seller provide wire instructions at least three (3) business days prior to the closing date and that Buyer shall have the right to verify such instructions by telephone callback to a designated contact at Seller's bank.
Given the size of the wire transfer, we should also include a provision requiring that if the closing occurs by escrow closing (i.e., through simultaneous exchange of documents and funds without an in-person closing), all funds and documents shall be held in escrow by Prestige Escrow Services LLC (or the title company) until all conditions to release have been satisfied.
IV. DUE DILIGENCE PERIOD
A. Duration and Commencement
The Due Diligence Period shall be forty-five (45) calendar days from the date of PSA execution, as reflected in the LOI. If the PSA is executed on April 11, 2026, the Due Diligence Period expires at 11:59 PM Eastern Time on May 26, 2026. We should confirm whether the LOI specifies calendar days or business days; our position is calendar days, which is the standard formulation.
The 45-day period is appropriate and market-standard for a transaction of this size and complexity. The Property is a mixed-use asset with multiple commercial tenants, 38 residential units, potential rent stabilization implications, environmental considerations related to the adjacent historical dry-cleaning operation, and an existing management agreement that requires analysis. The due diligence workstreams include:
• Physical inspection and building condition assessment
• Updated Phase I Environmental Site Assessment (Whitmore Environmental Sciences LLC)
• Updated ALTA/NSPS survey (Clearview Land Surveyors Inc.)
• Appraisal (Kensington Valuation Group Inc.)
• Zoning and land use review (Halcyon Planning Associates LLC)
• Lease audit and tenant interview process
• Rent stabilization and housing regulation analysis (Grace Nakamura)
• Financial underwriting and operating expense review
• Title review and objection process
• Service contract and management agreement review
• Insurance review
• Lender-required due diligence (Pinnacle Federal Savings Bank)
Each of these workstreams requires time for engagement of consultants, access to the Property, document review, and analysis. A period shorter than 45 days would create a risk of incomplete diligence and should be resisted.
B. Free-Look Termination Right
During the Due Diligence Period, Buyer shall have the absolute right to terminate the PSA for any reason or no reason upon written notice to Seller, with a full refund of the Initial Deposit (plus all accrued interest). This is the "free-look" right, which was expressly reflected in the LOI and is a fundamental deal point for Briarwood.
Upon expiration of the Due Diligence Period without Buyer's exercise of the termination right, Buyer shall be deemed to have waived its due diligence contingency. At that point, the Additional Deposit of $3,000,000 becomes due and payable within one (1) business day, and Buyer's termination rights are limited to the specific conditions described elsewhere in the PSA (Seller default, casualty, condemnation, failure of a Seller closing condition, etc.).
Negotiation Issue. Seller's counsel is likely to resist the absolute free-look right, characterizing it as providing Buyer with an undue option period during which the Property is effectively taken off the market without meaningful commitment from Buyer. Seller may request that Buyer's termination right during the DD period be limited to specific, enumerated grounds (e.g., discovery of a material title defect, environmental contamination, or a lease default), or that Buyer be required to provide written notice of specific objections as a condition to termination.
Our position is that the absolute free-look right is standard for transactions of this size in the New York market and was expressly agreed upon in the LOI. The free-look right is the quid pro quo for Buyer's agreement to post a substantial Initial Deposit ($6,000,000) and to expend significant time and resources on due diligence. Any limitation on the free-look right would fundamentally alter the risk allocation agreed upon in the LOI and should be rejected. We should hold firm on this point.
If Seller pushes back vigorously, we may consider a modest accommodation — for example, an agreement that Buyer will use good-faith efforts to notify Seller of any material due diligence concerns promptly upon discovery, provided that such obligation is for informational purposes only and does not limit or condition Buyer's absolute termination right. However, we should not agree to any formulation that converts the free-look into a contingency requiring Buyer to demonstrate specific objections.
C. Access Rights
During the Due Diligence Period (and continuing through closing, subject to reasonable limitations), Buyer and its authorized consultants, representatives, and agents shall have reasonable access to the Property for the purpose of conducting inspections, tests, studies, and investigations. The PSA should specify the following terms and conditions for access:
(a) Notice: Buyer shall provide Seller (or Seller's property manager, Atlas Urban Management Corp.) with at least forty-eight (48) hours' prior written notice before accessing the Property for any inspection or testing.
(b) Hours: Access shall be during normal business hours (Monday through Friday, 8:00 AM to 6:00 PM), unless otherwise agreed by Seller.
(c) Non-Invasive Testing: Buyer and its consultants shall have the right to conduct non-invasive testing, including but not limited to visual inspections, measurements, air quality testing, asbestos sampling of accessible materials, radon testing, and similar non-destructive activities, without the need for Seller's specific consent (subject to the general notice requirement).
(d) Phase II Environmental Investigation: Any Phase II environmental site assessment or other invasive testing (including soil borings, groundwater sampling, or subsurface investigation) shall require Seller's prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. If a Phase II is warranted based on the findings of the updated Phase I ESA, Seller's unreasonable refusal to consent should constitute a basis for Buyer to terminate the PSA with a full refund of deposits.
(e) Tenant Access: Access to tenant-occupied spaces shall be coordinated through Seller's property manager and shall be subject to the terms of the applicable lease regarding landlord access rights.
(f) Insurance: Buyer shall maintain, and shall cause its consultants to maintain, commercial general liability insurance in amounts not less than $2,000,000 per occurrence and $5,000,000 in the aggregate, naming Seller and Atlas Urban Management Corp. as additional insureds.
(g) Indemnification: Buyer shall indemnify, defend, and hold harmless Seller from and against any and all claims, liabilities, damages, costs, and expenses (including reasonable attorneys' fees) arising from or related to the activities of Buyer or its consultants on the Property, except to the extent arising from the negligence or willful misconduct of Seller or its agents, or from the discovery of pre-existing conditions not caused by Buyer.
(h) Restoration: Buyer shall restore the Property to substantially the same condition as existed prior to any inspection or testing, to the extent any physical disturbance results from Buyer's activities.
The consultants we anticipate engaging for due diligence inspections include:
D. Document Delivery
The PSA should require Seller to deliver (or make available in an electronic data room) a comprehensive set of due diligence documents within ten (10) business days of PSA execution. The document delivery requirement is critical to ensuring that Buyer has sufficient time to review and analyze the relevant information within the 45-day Due Diligence Period. A ten-business-day delivery window (i.e., by approximately April 25, 2026, assuming PSA execution on April 11) leaves Buyer with approximately 31 calendar days for substantive review, which is adequate but not generous.
The categories of documents to be delivered include:
(a) All tenant leases, amendments, side letters, guarantees, and related correspondence;
(b) Current rent roll (certified by Seller as accurate);
(c) Operating statements for the three most recent calendar years (2023, 2024, and 2025 year-to-date) and the current year budget;
(d) All service contracts, maintenance agreements, and vendor contracts;
(e) Existing title policy, title commitment, and all recorded exception documents;
(f) Existing ALTA survey (dated March 2, 2011);
(g) All environmental reports, studies, and assessments (including the Phase I ESA by Whitmore Environmental Sciences LLC dated June 15, 2020);
(h) Zoning analysis, zoning lot documentation, and any pending zoning applications or requests;
(i) Real property tax bills, assessments, and any pending or prior tax certiorari proceedings;
(j) Seller's organizational documents (operating agreement, certificates of formation, amendments);
(k) Existing financing documents (Eastbridge Commercial Bank, N.A. mortgage, note, loan agreement, UCC-1 financing statement);
(l) Insurance policies (property, liability, umbrella, rent loss/business interruption);
(m) Violation history from DOB, ECB, HPD, and FDNY, including open violations and certificates of correction;
(n) Property management agreement with Atlas Urban Management Corp.;
(o) Capital expenditure records and reports for the past five years;
(p) All building permits, certificates of occupancy, temporary certificates of occupancy, and related governmental approvals;
(q) Security deposit records (amounts, form, and bank account information);
(r) Utility bills for the most recent 24 months;
(s) Warranties and guarantees for building systems, equipment, and recent capital improvements;
(t) Tenant correspondence regarding defaults, complaints, or disputes; and
(u) Any other documents or information reasonably requested by Buyer.
A preliminary due diligence request list has already been transmitted to Hargrove, Pettigrew & Sloane LLP (Rebecca Tran) on March 15, 2026. We have received an acknowledgment of receipt but have not yet received any responsive documents. We should follow up promptly upon PSA execution to ensure timely compliance with the document delivery obligation.
V. REPRESENTATIONS AND WARRANTIES
A. Seller's Representations — Recommended Scope
The PSA should include a comprehensive set of representations and warranties by Seller, covering the following categories. These representations are standard for a transaction of this type and are necessary to provide Buyer with contractual protections regarding the condition of the Property, the status of the tenant leases, and Seller's authority and standing. Each representation should be made as of the date of PSA execution and restated as of the closing date through a bring-down certificate.
Authority. Seller represents and warrants that (i) Meridian Gateway Holdings LLC is a limited liability company duly formed, validly existing, and in good standing under the laws of the State of New York; (ii) Seller has full power and authority to execute and deliver the PSA and all closing documents and to perform its obligations thereunder; (iii) the execution, delivery, and performance of the PSA have been duly authorized by all necessary member action, including any required consent of the Managing Members (Victor S. Papadopoulos and Elena K. Rosenberg) and any other members whose approval is required under the operating agreement; and (iv) the PSA constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.
Title. Seller represents and warrants that Seller holds fee simple title to the Property, free and clear of all liens, encumbrances, easements, restrictions, and other title matters except for the Permitted Exceptions as defined in the PSA and set forth on the title schedule. Seller further represents that Seller has not created, granted, or suffered any lien, encumbrance, or title defect that is not disclosed in the title commitment.
Leases. Seller represents and warrants that: (i) the rent roll attached to the PSA as an exhibit is complete, accurate, and current as of a date not earlier than ten (10) days prior to the PSA execution date; (ii) the copies of all leases delivered to Buyer are true, complete, and correct copies; (iii) no material defaults exist under any lease by either landlord or tenant (or, if any defaults exist, the same are specifically disclosed); (iv) there are no rent concessions, side agreements, options, rights of first refusal, rights of first offer, expansion rights, or other material lease provisions not reflected in the leases as delivered; and (v) all security deposits are held in accordance with applicable law, including New York General Obligations Law §7-103.
The specific leases that should be individually scheduled and referenced in the PSA include:
Environmental. Seller represents and warrants that: (i) to Seller's Knowledge, no Hazardous Materials (as defined in the PSA) are present on, in, or under the Property in violation of applicable Environmental Laws; (ii) Seller has not received any notice of any pending or threatened environmental claims, actions, or proceedings against the Property or Seller relating to the Property; (iii) there are no underground storage tanks (USTs) located on or under the Property; (iv) Seller has delivered to Buyer copies of all environmental reports, studies, and assessments in Seller's possession or control; and (v) Seller has not caused or permitted the release or discharge of any Hazardous Materials on, from, or at the Property. We will cross-reference the updated Phase I ESA to be commissioned from Whitmore Environmental Sciences LLC (Dr. Samantha Reeves) during the Due Diligence Period.
Litigation. Seller represents and warrants that there is no pending or, to Seller's Knowledge, threatened litigation, arbitration, administrative proceeding, or governmental investigation that (i) affects the Property or any portion thereof, (ii) seeks to enjoin or prevent the consummation of the transactions contemplated by the PSA, or (iii) would adversely affect Seller's ability to perform its obligations under the PSA. This representation should specifically cover tenant disputes, personal injury claims, and code enforcement actions.
Compliance. Seller represents and warrants that the Property complies in all material respects with all applicable laws, codes, regulations, and ordinances, including but not limited to (i) the New York City Zoning Resolution (the Property is located in the C6-4 zoning district), (ii) the New York City Building Code, (iii) the New York City Fire Code, (iv) the Americans with Disabilities Act (ADA) and its implementing regulations, and (v) all applicable environmental and housing laws. Seller further represents that, to Seller's Knowledge, there are no material open violations issued by the New York City Department of Buildings (DOB), the Environmental Control Board (ECB), the New York City Department of Housing Preservation and Development (HPD), or the New York City Fire Department (FDNY).
Financial Statements. Seller represents and warrants that the operating statements, financial data, and other financial information delivered to Buyer are true, complete, and accurate in all material respects, have been prepared in accordance with Seller's customary accounting practices, and fairly present the results of operations of the Property for the periods covered. Seller specifically represents that the annualized in-place NOI of $6,960,000 is accurately represented and is calculated in a manner consistent with the methodology set forth in the operating statements delivered to Buyer.
Service Contracts. Seller represents and warrants that a true and complete schedule of all service contracts, maintenance agreements, and vendor contracts relating to the Property has been delivered to Buyer. Seller further represents that, except as specifically disclosed on the schedule, all such contracts are terminable by the owner of the Property upon not more than thirty (30) days' prior written notice without penalty or premium.
Property Management. Seller represents and warrants that the management agreement with Atlas Urban Management Corp. (Gerald Fitch, Senior Property Manager) is in full force and effect, that Seller is not in default thereunder, and that the agreement provides for a management fee of 4.0% of effective gross income. The agreement term extends through December 31, 2027. Seller represents that there are no outstanding management fees, bonuses, or other amounts due and unpaid to Atlas Urban Management Corp.
Taxes. Seller represents and warrants that all real property taxes, assessments, and other governmental charges applicable to the Property have been paid when due and are current as of the date of the PSA. Seller further represents that there is no pending tax certiorari proceeding or application for reduction of the assessed value of the Property. The current FY 2025/2026 real property taxes are $2,640,000.
FIRPTA. Seller represents and warrants that Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended. Seller agrees to deliver at closing a FIRPTA Non-Foreign Person Certificate (also known as a "FIRPTA affidavit") in the form prescribed by Treasury Regulation §1.1445-2(b)(2), certifying Seller's U.S. taxpayer identification number (EIN 27-6831044) and confirming that Seller is not a foreign person.
No Options / Rights of First Refusal. Seller represents and warrants that there are no outstanding options, rights of first refusal, rights of first offer, purchase agreements, letters of intent, or similar rights or agreements pursuant to which any third party has the right to acquire the Property or any portion thereof or any interest therein (other than the PSA).
Condemnation. Seller represents and warrants that there is no pending or, to Seller's Knowledge, threatened condemnation or eminent domain proceeding that would affect the Property or any portion thereof, and Seller has received no notice from any governmental authority of any proposed or contemplated condemnation or taking.
Insurance. Seller represents and warrants that the Property is insured under policies providing coverage in amounts and types consistent with prudent ownership of a comparable mixed-use property in the Borough of Manhattan, including property insurance, commercial general liability insurance, umbrella/excess liability insurance, and rent loss/business interruption insurance. Seller further represents that there are no material uninsured losses and that Seller has not received notice of cancellation or non-renewal of any insurance policy.
Existing Financing. Seller represents and warrants that the existing mortgage in favor of Eastbridge Commercial Bank, N.A. (original principal amount of $41,100,000, recorded April 14, 2011, at the New York City Register's Office) is in good standing, that no defaults or events of default exist thereunder, and that the estimated payoff amount as of the anticipated closing date is approximately $28,700,000. Seller further represents that the associated UCC-1 Financing Statement will be terminated at or prior to closing.
B. Survival. We recommend that Seller's representations and warranties survive closing for a period of twelve (12) months following the closing date, with an extended survival period of eighteen (18) months for environmental representations and tax representations. The extended survival period for environmental and tax matters is appropriate given the potential for latent environmental conditions and post-closing tax adjustments that may not become apparent within the standard survival period.
Negotiation Issue. Seller's counsel will almost certainly push back on the survival period. Seller's preferred position will be that all representations and warranties terminate at closing or, at most, survive for six (6) months. This is a common position for institutional sellers who wish to achieve a "clean break" upon closing.
Our recommended negotiation approach is as follows:
(a) Initial position: 12-month survival for general representations; 18-month survival for environmental and tax representations.
(b) Fallback position: 9-month survival for general representations; 12-month survival for environmental and tax representations.
(c) Further fallback (if necessary to close the deal): 9-month survival for all representations, with a cap on Seller's aggregate post-closing liability for breach of representations equal to the amount of the Additional Deposit ($3,000,000). The inclusion of a damages cap may make a longer survival period more palatable to Seller, as it limits Seller's downside exposure. The $3,000,000 cap (2.5% of the purchase price) is within the range of market practice for transactions of this size.
(d) Hard floor: Under no circumstances should we agree to representations terminating at closing. Even a 6-month survival period is inadequate for a transaction with this level of complexity and the number of representations involved.
C. Buyer's Representations
The PSA should include a reciprocal set of representations and warranties by Buyer, although narrower in scope than Seller's representations, reflecting the fundamental asymmetry in a purchase and sale transaction (where the bulk of the information risk resides with the Seller and the Property). Buyer's representations should include the following:
(a) BFO 450 West 34th LLC (or its predecessor-in-interest, Briarwood Family Office LLC) is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation;
(b) Buyer has full power and authority to execute and deliver the PSA and to perform its obligations thereunder;
(c) The execution, delivery, and performance of the PSA have been duly authorized by all necessary action on the part of Buyer;
(d) Buyer has, or will have at closing, sufficient funds to consummate the transaction and pay the full purchase price and all closing costs; and
(e) There is no pending or threatened litigation that would impair Buyer's ability to consummate the transaction.
Buyer's representations should survive closing for the same period as Seller's representations, although Buyer's post-closing exposure is inherently limited given the narrow scope of its representations.
D. Knowledge Qualifier
A critical drafting issue in the representations and warranties article is the definition of "Seller's Knowledge" or "to the knowledge of Seller." This qualifier is used throughout the representations to limit Seller's exposure to matters that are actually known to identified individuals. The scope of the knowledge definition directly impacts the value of the representations to Buyer.
We recommend that "Seller's Knowledge" be defined as the actual knowledge of Victor S. Papadopoulos and Elena K. Rosenberg (the Managing Members), after reasonable inquiry of the following individuals:
• Gerald Fitch, Senior Property Manager, Atlas Urban Management Corp. (the property manager responsible for day-to-day operations, tenant relations, maintenance, and compliance)
The inclusion of a "reasonable inquiry" obligation is essential. The Managing Members of Meridian may not be personally involved in the day-to-day management and operations of the Property; those responsibilities are delegated to Atlas Urban Management Corp. under the management agreement. Without an inquiry obligation, the knowledge qualifier would create a perverse incentive for Seller to avoid asking questions of its own property manager, thereby insulating Seller from knowledge that its agent possesses.
Negotiation Issue. Seller's counsel will very likely seek to limit the knowledge definition to the actual knowledge of the Managing Members, without any inquiry obligation. Seller may argue that an inquiry obligation is effectively a "should have known" standard that imposes constructive knowledge liability.
Our response should be that we are not seeking constructive knowledge. We are seeking a confirmation that the individuals making the representations have taken the minimal step of asking the person who actually runs the building whether the representations are true. The property manager is Seller's own agent, retained and compensated by Seller to manage the Property. An inquiry of the property manager is not onerous — it is the most basic form of due diligence that any responsible owner would undertake before making representations about the condition and status of its own property.
If Seller resists the inquiry obligation entirely, our fallback position is to accept an "actual knowledge" standard but expand the list of individuals whose knowledge is imputed to Seller to include Gerald Fitch (Atlas Urban Management Corp.) and Elena K. Rosenberg, in addition to Victor S. Papadopoulos. This provides some protection without imposing an affirmative inquiry obligation, on the theory that knowledge possessed by the property manager should be deemed knowledge of the principal.
VI. TITLE AND SURVEY
A. Title Insurance
Buyer intends to obtain an owner's title insurance policy from Granite State Title Insurance Company (Title Officer: Martin Clearfield) in the full amount of the purchase price ($120,000,000), with customary endorsements. The PSA should condition Buyer's obligation to close on the title insurer's unconditional commitment to issue the owner's policy subject only to Permitted Exceptions.
The customary endorsements to be obtained include:
• Zoning endorsement (3.1 / ALTA 3.1-06) — confirming the property's zoning classification and permissible uses
• Access endorsement (ALTA 17-06 / ALTA 17.1-06) — confirming legal access to a public right-of-way
• Contiguity endorsement (ALTA 19-06) — if the Property comprises multiple tax lots or parcels, confirming contiguity (to be determined based on survey review)
• Survey endorsement (ALTA 25-06) — confirming that the survey satisfies the title insurer's requirements
• Comprehensive endorsement (ALTA 9.1-06 / ALTA 9.2-06) — providing additional coverage for covenant violations, encroachment, and mineral rights
• Tax parcel endorsement (ALTA 18-06) — confirming the tax parcel identification
• ALTA 9.0 series endorsement — restricting the title insurer's right to rely on certain policy exclusions
• Non-imputation endorsement — ensuring that the title insurer cannot impute knowledge of a title defect to the owner based on the knowledge of a prior equity holder or transferor; required for the SPV structure
The existing title policy is Policy No. GST-2011-04872, issued by Granite State Title Insurance Company and dated April 14, 2011, with an insured amount of $68,500,000. This existing policy will not provide adequate coverage for Buyer's acquisition at the $120,000,000 purchase price, and a new policy is required. However, the existing policy may provide a basis for negotiating a reissue rate or reduced premium for the new policy.
B. Permitted Exceptions
The "Permitted Exceptions" schedule is one of the most important provisions of the PSA, as it defines the universe of title encumbrances and matters to which Buyer is willing to take title at closing. The Permitted Exceptions schedule will be negotiated based on a thorough review of the preliminary title report from Granite State Title Insurance Company, the updated ALTA/NSPS survey, and Buyer's due diligence findings.
Based on our preliminary title review, the following encumbrances have been identified:
1. Existing Mortgage — Eastbridge Commercial Bank, N.A. Original principal amount of $41,100,000, recorded April 14, 2011. Estimated payoff at closing: approximately $28,700,000. This is NOT a Permitted Exception. The Eastbridge mortgage must be either (a) satisfied and discharged at closing (with Seller delivering a recorded satisfaction piece) or (b) assigned to Pinnacle Federal Savings Bank in connection with a CEMA transaction. In either case, the Property must be conveyed free and clear of the Eastbridge mortgage lien.
2. UCC-1 Financing Statement — Eastbridge Commercial Bank, N.A. This UCC-1 secures the personal property and fixtures collateral associated with the Eastbridge loan. This is NOT a Permitted Exception. A UCC-3 Termination Statement must be filed at or prior to closing.
3. Ashford Partners LLC Easement for Vault Space. Recorded at Liber 4823, Page 112. This is a standard utility easement granting Consolidated Edison Company of New York, Inc. rights to maintain vault space beneath the sidewalk or building. Based on preliminary review, this easement is likely a Permitted Exception, as it is a standard utility encumbrance that does not materially interfere with the current use, occupancy, or access of the Property. We will confirm during due diligence that the easement does not restrict or interfere with any planned use or development.
4. Standard NYC Zoning Lot Restrictions. These are standard zoning restrictions applicable to all properties in the C6-4 zoning district and do not create any unique burden on the Property. Permitted Exception.
5. Tenant Leases. All tenant leases in effect as of the closing date, as scheduled in the PSA. Permitted Exceptions.
6. Real Property Taxes and Assessments Not Yet Due and Payable. The lien of real property taxes for the current fiscal year that are not yet due and payable as of the closing date, subject to proration. Permitted Exception.
Additional exceptions may be identified upon receipt of the updated title commitment and survey. The PSA should provide that the Permitted Exceptions schedule will be finalized prior to the expiration of the Due Diligence Period, and that any encumbrance not listed as a Permitted Exception shall be deemed a title objection that Seller is required to cure.
C. Title Objections and Cure
The PSA should include a detailed title objection and cure procedure, as follows:
Title Objection Period. Buyer shall deliver a written title objection letter to Seller within fifteen (15) business days after Buyer's receipt of the title commitment from Granite State Title Insurance Company, identifying all title exceptions to which Buyer objects. This period is separate from and runs concurrently with the Due Diligence Period.
Seller's Mandatory Cure Obligations. Seller shall be unconditionally obligated to cure (at Seller's sole cost and expense, without limitation as to amount) the following categories of title defects at or prior to closing:
(i) All monetary liens and encumbrances affecting the Property, including but not limited to mortgages, judgment liens, tax liens, mechanic's liens, and assessment liens. Seller's obligation to cure monetary liens shall be absolute and without any dollar cap. This is standard in New York commercial real estate transactions and reflects the fundamental principle that a seller must deliver marketable title free of monetary encumbrances.
(ii) Any title defect that Seller created or suffered voluntarily after the date of the PSA, including any new lien, encumbrance, easement, covenant, restriction, or other title exception arising from Seller's acts or omissions between PSA execution and closing.
Cure Period for Other Title Defects. For title defects that are not subject to Seller's mandatory cure obligation, Seller shall have a cure period of thirty (30) days after receipt of Buyer's title objection letter (or such shorter period as remains before the scheduled closing date) to cure or remove such defects to the reasonable satisfaction of Buyer and the title insurer.
Buyer's Remedies if Title Defects Are Not Cured. If Seller fails to cure any title defect within the applicable cure period, Buyer may elect, in Buyer's sole discretion, to:
(a) Accept title to the Property subject to the uncured title defect(s), without any reduction in the purchase price (unless Buyer and Seller agree otherwise);
(b) Terminate the PSA by written notice to Seller, with a full and immediate refund of all deposits (plus accrued interest); or
(c) If Seller has the ability to cure the title defect but refuses to do so, pursue specific performance of Seller's obligation to cure and close the transaction.