1036-00001 · Banking & Finance practice group · Engagement & Administration

engagement-letter-fairwater-take-out-financing.docx DOCUMENT Finance & Banking

17 / 36 ← → ✕

PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP 425 Park Avenue New York, New York 10022

August 11, 2025

David A. Whitfield, Esq. General Counsel Fairwater Real Estate Investment Trust 8400 Chesapeake Center Drive, Suite 1200 Columbia, Maryland 21044

Re: Engagement of Calderwood & Harkness LLP — Permanent Take-Out Financing for Fairwater Real Estate Investment Trust Matter No. 1036-00001

Dear Mr. Whitfield:

1. Purpose and Background

Calderwood & Harkness LLP ("we," "us," or the "Firm") is pleased to confirm the terms of our engagement by Fairwater Real Estate Investment Trust, a Maryland real estate investment trust ("Fairwater" or the "Company"; NYSE: FWTR), to serve as outside counsel in connection with the permanent take-out financing described below. This engagement letter (this "Letter") sets forth the terms and conditions under which the Firm will provide legal services to Fairwater in connection with this matter, and, once countersigned by an authorized representative of Fairwater, will constitute our mutual agreement regarding the scope, staffing, and economics of the representation.

By way of background, we understand the following facts and circumstances that give rise to this engagement. On June 30, 2025, Fairwater, through its operating partnership Fairwater Operating Partnership, L.P., a Delaware limited partnership ("Fairwater OP"), closed the acquisition of a fourteen (14)-property multifamily residential portfolio (the "Sun Belt Portfolio") from Meridian Sunstone Holdings LLC for an aggregate purchase price of Three Hundred Eighty-Five Million Dollars ($385,000,000). The Sun Belt Portfolio consists of garden-style and mid-rise multifamily communities located across five states — Texas, Georgia, Florida, North Carolina, and Tennessee — totaling approximately 4,200 units.

The acquisition was partially financed with a Two Hundred Forty Million Dollar ($240,000,000) senior secured bridge credit facility (the "Bridge Facility"), provided by a syndicate of lenders led by Kensington National Bank, N.A., as administrative agent (the "Bridge Loan"). The Bridge Facility bears interest at the Secured Overnight Financing Rate ("SOFR") plus five hundred (500) basis points per annum and matures on December 31, 2025, with no extension options available. Given the approaching maturity date and the cost of carry associated with the Bridge Facility, Fairwater desires to negotiate, document, and close permanent financing to replace the Bridge Facility in its entirety prior to maturity (the "Take-Out Financing" or the "Permanent Loan").

We understand that Fairwater, in consultation with its financial advisor, Beacon Ridge Capital Advisors LLC, has identified Clarendon Metropolitan Insurance Company as the anticipated permanent lender, and that preliminary term sheet discussions are underway. Our engagement will encompass the full range of borrower-side legal services necessary to effectuate the Take-Out Financing and the simultaneous payoff and discharge of the Bridge Facility, as more fully described in Section 2 below.

2. Scope of Engagement

Calderwood & Harkness will represent Fairwater and its subsidiaries (including Fairwater OP and the special purpose entity borrowers that own the individual properties comprising the Sun Belt Portfolio) in connection with all aspects of the Take-Out Financing. Without limiting the generality of the foregoing, our services will include the following:

(a) Term Sheet and Commitment Letter. Review and negotiation of the term sheet and commitment letter (and any application or rate lock agreement) with the proposed permanent lender, currently anticipated to be Clarendon Metropolitan Insurance Company ("Clarendon Metropolitan"), for a Two Hundred Forty Million Dollar ($240,000,000) commercial mortgage-backed securities ("CMBS") mortgage loan, including negotiation of material business and legal terms such as interest rate, amortization schedule, prepayment provisions, defeasance mechanics, reserve requirements, cash management structures, and transfer and assumption provisions.

(b) Permanent Loan Documents. Drafting, review, and negotiation of all permanent loan documents, including without limitation: the loan agreement (or credit agreement), promissory note (or notes), non-recourse carve-out guaranty agreement (with Fairwater OP as guarantor), environmental indemnity agreement, mortgage instruments (including deeds of trust for properties located in Texas, North Carolina, and Tennessee, and mortgages for properties located in Georgia and Florida), assignments of leases and rents, cash management agreements, lockbox agreements, subordination, non-disturbance, and attornment agreements (to the extent required), and all ancillary closing documents.

(c) SPE Organizational Documents. Review and negotiation of special purpose entity ("SPE") organizational documents, including the preparation of amended and restated limited liability company agreements for each of the fourteen (14) SPE borrowers (Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC, each a Delaware limited liability company) incorporating CMBS-standard separateness covenants, single purpose entity provisions, independent director requirements, and restrictions on voluntary and involuntary bankruptcy filings, all as required by Clarendon Metropolitan and the rating agencies.

(d) Legal Opinions. Preparation of borrower's counsel legal opinions to be delivered at closing, including opinions as to (i) the due organization, valid existence, and good standing of the borrower entities, (ii) the authority and capacity of each borrower entity to enter into the loan documents, (iii) the due execution, delivery, and enforceability of the loan documents, (iv) non-contravention of organizational documents and applicable law, and (v) non-consolidation opinions (so-called "true sale" or "substantive consolidation" opinions) with respect to each SPE borrower, to the extent required by the lender and/or the rating agencies.

(e) Bridge Facility Payoff. Coordination of the simultaneous payoff of the Bridge Facility with Kensington National Bank, N.A. and its counsel, Halcourt Briggs & Devlin LLP, including review of payoff letters and payoff mechanics, negotiation and review of lien release documents (including releases and satisfactions of mortgages, deeds of trust, and security agreements), UCC-3 termination statements, and any intercreditor or subordination agreements that must be terminated or released in connection with the refinancing.

(f) Title and Survey Matters. Review of title commitments, pro forma title insurance policies, existing and updated ALTA/NSPS surveys, and related title matters in connection with the Permanent Loan. Title insurance is expected to be provided by Marlowe Asset Management Title Insurance Group, Inc. through its local issuing agents in each of the five property states. We will review title exceptions, negotiate title endorsements required by the lender (including, as applicable, ALTA 9 comprehensive endorsements, ALTA 3.1 zoning endorsements, and ALTA 15/15.1/15.2 non-imputation and fairway endorsements), and coordinate the resolution of any title defects or exceptions identified during the review process.

(g) Coordination with Advisors and Opposing Counsel. Coordination with Fairwater's financial advisor, Beacon Ridge Capital Advisors LLC, and with opposing counsel, Ashworth McPhail LLP (counsel to Clarendon Metropolitan), as necessary throughout the transaction. We will also interface with Fairwater's internal legal and finance teams, as well as with any third-party service providers (including environmental consultants, appraisers, and property managers), to the extent reasonably necessary to advance the transaction.

(h) Corporate Authorization Documents. Preparation of board resolutions (or trustee resolutions, as applicable) for the Fairwater REIT Board of Trustees, partnership resolutions or consents for Fairwater OP, and member or manager resolutions for each of the SPE borrowers, as well as closing certificates, officer's certificates, secretary's certificates, good standing certificates, and other corporate and organizational authorization documents required in connection with the closing of the Permanent Loan.

(i) UCC Filings. Review and coordination of Uniform Commercial Code ("UCC") financing statement filings (UCC-1 filings) in the State of Delaware (as the state of organization of each SPE borrower and Fairwater OP) and in each applicable property state (Texas, Georgia, Florida, North Carolina, and Tennessee), as well as UCC searches and lien searches to confirm the priority of the lender's security interests.

(j) Other Services. Such other legal services as may be reasonably necessary or appropriate to effect the closing of the Permanent Loan and the full repayment and discharge of the Bridge Facility, including attendance at any pre-closing or closing meetings (whether in person or by videoconference), preparation of closing checklists and closing memoranda, coordination of the closing escrow and funds flow, and post-closing deliveries.

We will endeavor to proceed diligently and to coordinate the timing of the Permanent Loan closing with Fairwater's objective of retiring the Bridge Facility well in advance of its December 31, 2025 maturity date. Based on preliminary discussions, we understand that the parties are targeting a closing date on or about October 31, 2025, although the actual closing date will depend on the pace of negotiations, due diligence, and the satisfaction of closing conditions.

3. Limitations on Scope; Excluded Services

This engagement is limited to banking and finance matters directly related to the Take-Out Financing. It does not extend to, and we will not be providing, the following categories of legal services:

(a) Securities Law. Securities law advice of any kind, including advice regarding the Company's SEC reporting obligations related to the refinancing (such as the filing of Current Reports on Form 8-K, the disclosure of the Permanent Loan in periodic reports on Form 10-Q or Form 10-K, or the preparation of any prospectus supplement or offering memorandum). For all securities law and SEC reporting matters arising in connection with the refinancing, Fairwater should consult its regular corporate and securities counsel, Crestline & Alderman LLP (Patricia S. Keene, lead partner; One South Street, Suite 2800, Baltimore, Maryland 21202).

(b) Tax Advice. Federal or state income tax advice, including without limitation any matters relating to Fairwater's qualification and status as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), and the requirement under Section 857(a)(1) of the Code to distribute at least ninety percent (90%) of Fairwater's taxable income (determined without regard to the dividends-paid deduction and excluding net capital gain) in the form of dividends to its shareholders. For all tax matters, including any analysis of the tax implications of the Permanent Loan structure, debt modifications, or original issue discount, Fairwater should consult its independent tax advisors and/or Crestline & Alderman LLP.

(c) Regulatory Advice. Regulatory advice of any nature, whether relating to banking, insurance, or other regulated industries. We will not be advising on the regulatory status or compliance obligations of Clarendon Metropolitan, Kensington National Bank, N.A., or any other regulated entity involved in the transaction.

(d) Transfer and Recording Taxes. State and local transfer tax, mortgage recording tax, documentary stamp tax, or intangible tax advice, although we will coordinate with local counsel in each of the five property jurisdictions (Texas, Georgia, Florida, North Carolina, and Tennessee) as needed for the recording of mortgage instruments and other transactional documents, and for the calculation and payment of applicable recording and filing fees.

(e) Environmental, Zoning, and Land Use Matters. Environmental, zoning, land use, entitlement, or other real property regulatory matters, except to the extent of reviewing environmental indemnity agreements, representations, warranties, and covenants contained in the loan documents. Fairwater should rely upon its environmental consultants and local counsel for advice regarding compliance with environmental laws, zoning ordinances, building codes, and land use regulations applicable to the Sun Belt Portfolio properties.

Notwithstanding the foregoing limitations, we will coordinate with Crestline & Alderman LLP as necessary on matters of REIT compliance, corporate governance, and securities disclosure that intersect with or arise out of the financing. We will also coordinate with local counsel in the relevant property states for purposes of recording instruments, filing documents, providing local law opinions, and addressing jurisdiction-specific legal requirements.

4. Staffing

The following attorneys will be primarily responsible for this engagement:

Philip Hartmann, Partner — Responsible Partner. Mr. Hartmann will have overall supervisory responsibility for the engagement and will serve as your primary point of contact at the Firm. Mr. Hartmann has extensive experience representing REITs, institutional investors, and operating companies in CMBS, agency, and balance-sheet commercial real estate financings, and has closed in excess of $15 billion in secured and unsecured real estate credit facilities over the course of his career. He can be reached at (212) 555-4100 or phartmann@calderwoodharkness.com.

Claudia Merritt, Partner — Billing Partner. Ms. Merritt will serve as the billing partner for this engagement and will be available for substantive matters as needed. Ms. Merritt's practice focuses on structured finance and securitization, and she brings particular expertise in CMBS loan documentation, rating agency requirements, and defeasance and yield maintenance mechanics. She can be reached at (212) 555-4215 or cmerritt@calderwoodharkness.com.

Lisa Morrow, Associate — Lead Associate. Ms. Morrow will manage the day-to-day drafting, negotiation, and due diligence workstreams for the engagement. Ms. Morrow has significant experience in commercial real estate finance transactions, including CMBS origination and bridge-to-permanent refinancings. She can be reached at (212) 555-4338 or lmorrow@calderwoodharkness.com.

Marcus Leung, Associate — Working Associate. Mr. Leung will assist with document preparation, due diligence, title and survey review, UCC searches and filings, and closing mechanics. He can be reached at (212) 555-4492 or mleung@calderwoodharkness.com.

Additional attorneys, including paralegals, junior associates, and local counsel in the relevant property states (Texas, Georgia, Florida, North Carolina, and Tennessee), may be engaged as the transaction requires. We will discuss the engagement of any local counsel with you in advance and will seek your approval before incurring material additional staffing costs. To the extent that local counsel is engaged, such counsel will be retained either as sub-counsel to Calderwood & Harkness or directly by Fairwater, as mutually agreed.

5. Billing Rates and Fee Arrangements

Our fees for this engagement will be based on the time spent by the attorneys and other legal professionals working on the matter, billed at the following current hourly rates:

The foregoing rates are the Firm's standard rates as of the date of this Letter. Rates are subject to periodic adjustment, typically on an annual basis effective January 1 of each calendar year. We will provide Fairwater with advance written notice of any rate adjustments. Any rate adjustment will apply prospectively to time incurred after the effective date of the adjustment.

Based on our experience with transactions of comparable size and complexity — specifically, a $240,000,000 CMBS take-out financing secured by a fourteen (14)-property multifamily portfolio located across five states, with simultaneous payoff and discharge of an existing bridge facility — we estimate that our legal fees for this engagement will be in the range of Seven Hundred Fifty Thousand Dollars ($750,000) to One Million One Hundred Thousand Dollars ($1,100,000), exclusive of disbursements, out-of-pocket expenses, and local counsel fees. This estimate is provided for budgeting purposes only and does not constitute a cap, ceiling, or fixed-fee arrangement. Actual fees may be higher or lower than the estimated range depending on range factors, including the complexity and duration of negotiations with Clarendon Metropolitan and Ashworth McPhail LLP, the number of document drafts and revision cycles, the severity and complexity of title issues identified during the review process, the extent of rating agency involvement and requirements, the need for supplemental or amended opinions, and other unforeseen circumstances. We will endeavor to keep you apprised of the status of fees as the engagement progresses and will promptly advise you if we anticipate that fees will materially exceed the upper end of the estimated range.

6. Expenses and Disbursements

In addition to legal fees, Fairwater will be responsible for reimbursement of reasonable out-of-pocket expenses and disbursements incurred by the Firm in connection with the engagement, including but not limited to the following:

• Filing fees, including UCC filing fees, Secretary of State filing and search fees, county recording fees, and other governmental filing charges;

• Title search costs and title insurance premium charges, to the extent not paid directly by Fairwater or by the title insurance company pursuant to separate arrangements;

• Travel expenses, including transportation (airfare, rail, ground transportation), lodging, and meals, for any required property visits, in-person negotiations, or in-person closings (travel will be at coach/economy class unless otherwise agreed, and lodging will be at standard business-class hotels);

• Courier, overnight delivery (e.g., Severin Partners LLC, Halcyon Partners LLC), and postage costs;

• Photocopying, printing, scanning, and document reproduction charges;

• Computerized legal research charges (e.g., Westmark Data Systems, Sundial Solutions, Cascade Services Inc.);

• Long-distance telephone and conference call charges;

• Fees and expenses of local counsel retained in Texas, Georgia, Florida, North Carolina, and Tennessee in connection with the recording of instruments, local law opinions, and jurisdiction-specific matters (which will be billed through our invoices or separately by local counsel directly to Fairwater, as mutually agreed).

All expenses will be billed at actual cost without markup. We will seek Fairwater's prior approval before incurring any single expense item in excess of Five Thousand Dollars ($5,000), except where such expense is required on an expedited basis in connection with an imminent closing or filing deadline.

7. Billing and Payment Terms

We will render monthly invoices for professional fees and disbursements incurred during the preceding calendar month. Each invoice will provide a summary of fees by timekeeper, a description of services rendered, and an itemization of disbursements. Invoices will be transmitted electronically in PDF format unless Fairwater requests hard-copy originals.

All invoices are due and payable within thirty (30) days of the invoice date. Payments should be made by wire transfer or check to the Firm's designated account, as set forth on the invoice. All invoices will reference Matter No. 1036-00001 and should be directed to:

Naomi T. Sinclair Chief Financial Officer Fairwater Real Estate Investment Trust 8400 Chesapeake Center Drive, Suite 1200 Columbia, Maryland 21044

Email: nsinclair@fairwaterreit.com

If Fairwater has any questions or disputes regarding any invoice, we ask that you contact Claudia Merritt promptly so that the matter can be discussed and resolved in a timely manner. The existence of a billing question or dispute with respect to any portion of an invoice shall not relieve Fairwater of the obligation to pay the undisputed portion of such invoice within the thirty (30)-day payment period.

8. Client Identity and Conflicts

For purposes of this engagement, our client is Fairwater Real Estate Investment Trust and, solely in connection with this matter, we will also represent the interests of Fairwater OP, Fairwater Residential Management LLC, and the fourteen SPE borrower subsidiaries (Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC) to the extent necessary to effectuate the Take-Out Financing. Notwithstanding the foregoing, we understand that our attorney-client relationship is with Fairwater REIT, and any advice rendered to or communications with officers and employees of Fairwater OP, Fairwater Residential Management LLC, or the SPE borrower subsidiaries are provided in furtherance of our representation of Fairwater REIT. In the event that any conflict of interest were to arise among Fairwater REIT, Fairwater OP, or any of the SPE borrower subsidiaries, we would promptly advise you and discuss appropriate steps, which could include the engagement of separate counsel for one or more of such entities.

Prior to issuing this Letter, we have conducted a conflicts check with respect to the parties currently known to be involved in or related to this transaction, including Fairwater Real Estate Investment Trust, Fairwater Operating Partnership, L.P., Fairwater Residential Management LLC, Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC, Clarendon Metropolitan Insurance Company, Kensington National Bank, N.A., Pinnacle Trust Company, Greystone Commerce Bank, Redfield Capital Markets, LLC, Beacon Ridge Capital Advisors LLC, Ashworth McPhail LLP, Halcourt Briggs & Devlin LLP, Meridian Sunstone Holdings LLC, and Marlowe Asset Management Title Insurance Group, Inc. Based on our review, no conflicts of interest have been identified that would preclude or materially limit our representation of Fairwater in connection with this engagement. We will conduct additional conflicts checks as new parties, counterparties, or other interested persons are identified during the course of the transaction, and we will promptly advise you of any potential conflicts that may arise.

We note that, in the ordinary course of our practice, Calderwood & Harkness has in the past represented, and may in the future represent, one or more of the entities identified above (other than Fairwater and its affiliates) in matters unrelated to this engagement. By countersigning this Letter, Fairwater acknowledges that the Firm's representation of Fairwater in connection with this matter does not preclude the Firm from representing other clients (including parties to this transaction) in matters that are not substantially related to this engagement, provided that such other representations do not involve the assertion of a position adverse to Fairwater with respect to the subject matter of this engagement.

9. Confidentiality

All information received from Fairwater or its affiliates, officers, employees, agents, or advisors in connection with this engagement will be treated as confidential in accordance with the Firm's professional and ethical obligations, subject to applicable law and the terms of any confidentiality or non-disclosure agreements to which the Firm may be a party. We will maintain appropriate physical, electronic, and administrative safeguards to protect the confidentiality of client information.

We will not disclose confidential client information to third parties without Fairwater's prior written consent, except (a) as required by law, court order, or the rules of professional conduct, (b) as reasonably necessary for the performance of our services in connection with this engagement (including, without limitation, disclosure to local counsel, title insurance companies, or in connection with the preparation and delivery of legal opinions), or (c) as impliedly authorized in order to carry out the representation. To the extent that we engage local counsel or other third-party service providers in connection with this matter, we will ensure that such parties are bound by appropriate confidentiality obligations.

10. Document Retention

Following the conclusion of this engagement (whether by closing, termination, or otherwise), we will retain client files in accordance with the Firm's document retention policies, which generally provide for the retention of significant transactional documents — including executed closing documents, legal opinions, and material correspondence — for a period of ten (10) years following the closing of the transaction. Working papers, drafts, and internal memoranda may be retained for shorter periods as determined by the Firm's policies.

Original documents will be returned to Fairwater upon written request at any time during or after the engagement. Upon the expiration of the applicable retention period, the Firm reserves the right to destroy or dispose of client files without further notice, unless Fairwater has previously requested the return of such files.

11. Termination

Either Fairwater or the Firm may terminate this engagement at any time upon written notice to the other party. Any such termination will be subject to the applicable rules of professional responsibility governing withdrawal from representation, including the obligation to provide reasonable notice and to take steps to protect the client's interests during any transition period.

In the event of termination, Fairwater will be responsible for payment of all fees and expenses incurred through the date of termination, in accordance with the billing and payment terms set forth in this Letter. Upon termination, we will promptly deliver to Fairwater (or to successor counsel designated by Fairwater) all client files, documents, and property in our possession relating to this engagement, subject to the Firm's right to retain copies for its records and conflict-checking purposes.

12. Governing Law

This engagement letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflict of laws that would require the application of the laws of any other jurisdiction. Any dispute arising out of or relating to this engagement or this Letter shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the County of New York, or the United States District Court for the Southern District of New York.

13. No Guarantee of Outcome

While we will use our best professional efforts in representing Fairwater in connection with the Take-Out Financing, we cannot and do not guarantee any particular outcome with respect to the negotiation, documentation, or closing of the Permanent Loan, the terms and conditions thereof, or the timing of the transaction. The successful completion of the Take-Out Financing will depend on a number of factors beyond our control, including the willingness of the lender to agree to acceptable terms, the satisfaction of closing conditions, the resolution of title and survey issues, and market conditions. Our undertaking is to provide competent and diligent legal representation, not to ensure any specific result.

14. Acceptance and Countersignature

We are enthusiastic about the opportunity to represent Fairwater in connection with this significant refinancing transaction, and we look forward to working with you, Ms. Sinclair, Ms. Donahue, and the broader Fairwater team to bring the Take-Out Financing to a successful closing.

If the terms of this engagement are acceptable, please confirm Fairwater's agreement by having an authorized representative sign and return a copy of this Letter to the undersigned. A countersigned copy may be returned by email (in PDF format) or by hand delivery or overnight courier. This Letter will become effective upon receipt of the executed counterpart.

Please do not hesitate to contact me if you have any questions regarding the terms of this Letter or any aspect of the engagement. I can be reached at (212) 555-4100 or phartmann@calderwoodharkness.com.

We appreciate the confidence you have placed in Calderwood & Harkness, and we look forward to a productive engagement.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Philip Hartmann Partner, Banking & Finance Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022

ACKNOWLEDGED AND AGREED:

By signing below, the undersigned, on behalf of Fairwater Real Estate Investment Trust, confirms that Fairwater has reviewed and agrees to the terms and conditions of this engagement letter, and authorizes Calderwood & Harkness LLP to proceed with the engagement described herein.

FAIRWATER REAL ESTATE INVESTMENT TRUST

By: ________

Name: David A. Whitfield

Title: General Counsel

Date: ________

Enclosures:

1. Firm Privacy Notice

2. Standard Terms of Engagement

cc: (via email)

Jonathan R. Calder, Chief Executive Officer, Fairwater Real Estate Investment Trust Naomi T. Sinclair, Chief Financial Officer, Fairwater Real Estate Investment Trust Rachel S. Donahue, Senior Vice President — Capital Markets, Fairwater Real Estate Investment Trust Claudia Merritt, Partner, Calderwood & Harkness LLP Lisa Morrow, Associate, Calderwood & Harkness LLP

Timekeeper	Title	Rate (per hour)
Philip Hartmann	Partner	$1,500
Claudia Merritt	Partner	$1,450
Other Partners (if applicable)	Partner	$1,350 – $1,550
Lisa Morrow	Senior Associate	$1,050
Other Senior Associates (if applicable)	Senior Associate	$950 – $1,100
Marcus Leung	Junior Associate	$825
Other Junior Associates (if applicable)	Junior Associate	$725 – $875
Paralegals	Paralegal	$375 – $475

PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP 425 Park Avenue New York, New York 10022
August 11, 2025
David A. Whitfield, Esq. General Counsel Fairwater Real Estate Investment Trust 8400 Chesapeake Center Drive, Suite 1200 Columbia, Maryland 21044
Re: Engagement of Calderwood & Harkness LLP — Permanent Take-Out Financing for Fairwater Real Estate Investment Trust Matter No. 1036-00001
Dear Mr. Whitfield:
1. Purpose and Background
Calderwood & Harkness LLP ("we," "us," or the "Firm") is pleased to confirm the terms of our engagement by Fairwater Real Estate Investment Trust, a Maryland real estate investment trust ("Fairwater" or the "Company"; NYSE: FWTR), to serve as outside counsel in connection with the permanent take-out financing described below. This engagement letter (this "Letter") sets forth the terms and conditions under which the Firm will provide legal services to Fairwater in connection with this matter, and, once countersigned by an authorized representative of Fairwater, will constitute our mutual agreement regarding the scope, staffing, and economics of the representation.
By way of background, we understand the following facts and circumstances that give rise to this engagement. On June 30, 2025, Fairwater, through its operating partnership Fairwater Operating Partnership, L.P., a Delaware limited partnership ("Fairwater OP"), closed the acquisition of a fourteen (14)-property multifamily residential portfolio (the "Sun Belt Portfolio") from Meridian Sunstone Holdings LLC for an aggregate purchase price of Three Hundred Eighty-Five Million Dollars ($385,000,000). The Sun Belt Portfolio consists of garden-style and mid-rise multifamily communities located across five states — Texas, Georgia, Florida, North Carolina, and Tennessee — totaling approximately 4,200 units.
The acquisition was partially financed with a Two Hundred Forty Million Dollar ($240,000,000) senior secured bridge credit facility (the "Bridge Facility"), provided by a syndicate of lenders led by Kensington National Bank, N.A., as administrative agent (the "Bridge Loan"). The Bridge Facility bears interest at the Secured Overnight Financing Rate ("SOFR") plus five hundred (500) basis points per annum and matures on December 31, 2025, with no extension options available. Given the approaching maturity date and the cost of carry associated with the Bridge Facility, Fairwater desires to negotiate, document, and close permanent financing to replace the Bridge Facility in its entirety prior to maturity (the "Take-Out Financing" or the "Permanent Loan").
We understand that Fairwater, in consultation with its financial advisor, Beacon Ridge Capital Advisors LLC, has identified Clarendon Metropolitan Insurance Company as the anticipated permanent lender, and that preliminary term sheet discussions are underway. Our engagement will encompass the full range of borrower-side legal services necessary to effectuate the Take-Out Financing and the simultaneous payoff and discharge of the Bridge Facility, as more fully described in Section 2 below.
2. Scope of Engagement
Calderwood & Harkness will represent Fairwater and its subsidiaries (including Fairwater OP and the special purpose entity borrowers that own the individual properties comprising the Sun Belt Portfolio) in connection with all aspects of the Take-Out Financing. Without limiting the generality of the foregoing, our services will include the following:
(a) Term Sheet and Commitment Letter. Review and negotiation of the term sheet and commitment letter (and any application or rate lock agreement) with the proposed permanent lender, currently anticipated to be Clarendon Metropolitan Insurance Company ("Clarendon Metropolitan"), for a Two Hundred Forty Million Dollar ($240,000,000) commercial mortgage-backed securities ("CMBS") mortgage loan, including negotiation of material business and legal terms such as interest rate, amortization schedule, prepayment provisions, defeasance mechanics, reserve requirements, cash management structures, and transfer and assumption provisions.
(b) Permanent Loan Documents. Drafting, review, and negotiation of all permanent loan documents, including without limitation: the loan agreement (or credit agreement), promissory note (or notes), non-recourse carve-out guaranty agreement (with Fairwater OP as guarantor), environmental indemnity agreement, mortgage instruments (including deeds of trust for properties located in Texas, North Carolina, and Tennessee, and mortgages for properties located in Georgia and Florida), assignments of leases and rents, cash management agreements, lockbox agreements, subordination, non-disturbance, and attornment agreements (to the extent required), and all ancillary closing documents.
(c) SPE Organizational Documents. Review and negotiation of special purpose entity ("SPE") organizational documents, including the preparation of amended and restated limited liability company agreements for each of the fourteen (14) SPE borrowers (Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC, each a Delaware limited liability company) incorporating CMBS-standard separateness covenants, single purpose entity provisions, independent director requirements, and restrictions on voluntary and involuntary bankruptcy filings, all as required by Clarendon Metropolitan and the rating agencies.
(d) Legal Opinions. Preparation of borrower's counsel legal opinions to be delivered at closing, including opinions as to (i) the due organization, valid existence, and good standing of the borrower entities, (ii) the authority and capacity of each borrower entity to enter into the loan documents, (iii) the due execution, delivery, and enforceability of the loan documents, (iv) non-contravention of organizational documents and applicable law, and (v) non-consolidation opinions (so-called "true sale" or "substantive consolidation" opinions) with respect to each SPE borrower, to the extent required by the lender and/or the rating agencies.
(e) Bridge Facility Payoff. Coordination of the simultaneous payoff of the Bridge Facility with Kensington National Bank, N.A. and its counsel, Halcourt Briggs & Devlin LLP, including review of payoff letters and payoff mechanics, negotiation and review of lien release documents (including releases and satisfactions of mortgages, deeds of trust, and security agreements), UCC-3 termination statements, and any intercreditor or subordination agreements that must be terminated or released in connection with the refinancing.
(f) Title and Survey Matters. Review of title commitments, pro forma title insurance policies, existing and updated ALTA/NSPS surveys, and related title matters in connection with the Permanent Loan. Title insurance is expected to be provided by Marlowe Asset Management Title Insurance Group, Inc. through its local issuing agents in each of the five property states. We will review title exceptions, negotiate title endorsements required by the lender (including, as applicable, ALTA 9 comprehensive endorsements, ALTA 3.1 zoning endorsements, and ALTA 15/15.1/15.2 non-imputation and fairway endorsements), and coordinate the resolution of any title defects or exceptions identified during the review process.
(g) Coordination with Advisors and Opposing Counsel. Coordination with Fairwater's financial advisor, Beacon Ridge Capital Advisors LLC, and with opposing counsel, Ashworth McPhail LLP (counsel to Clarendon Metropolitan), as necessary throughout the transaction. We will also interface with Fairwater's internal legal and finance teams, as well as with any third-party service providers (including environmental consultants, appraisers, and property managers), to the extent reasonably necessary to advance the transaction.
(h) Corporate Authorization Documents. Preparation of board resolutions (or trustee resolutions, as applicable) for the Fairwater REIT Board of Trustees, partnership resolutions or consents for Fairwater OP, and member or manager resolutions for each of the SPE borrowers, as well as closing certificates, officer's certificates, secretary's certificates, good standing certificates, and other corporate and organizational authorization documents required in connection with the closing of the Permanent Loan.
(i) UCC Filings. Review and coordination of Uniform Commercial Code ("UCC") financing statement filings (UCC-1 filings) in the State of Delaware (as the state of organization of each SPE borrower and Fairwater OP) and in each applicable property state (Texas, Georgia, Florida, North Carolina, and Tennessee), as well as UCC searches and lien searches to confirm the priority of the lender's security interests.
(j) Other Services. Such other legal services as may be reasonably necessary or appropriate to effect the closing of the Permanent Loan and the full repayment and discharge of the Bridge Facility, including attendance at any pre-closing or closing meetings (whether in person or by videoconference), preparation of closing checklists and closing memoranda, coordination of the closing escrow and funds flow, and post-closing deliveries.
We will endeavor to proceed diligently and to coordinate the timing of the Permanent Loan closing with Fairwater's objective of retiring the Bridge Facility well in advance of its December 31, 2025 maturity date. Based on preliminary discussions, we understand that the parties are targeting a closing date on or about October 31, 2025, although the actual closing date will depend on the pace of negotiations, due diligence, and the satisfaction of closing conditions.
3. Limitations on Scope; Excluded Services
This engagement is limited to banking and finance matters directly related to the Take-Out Financing. It does not extend to, and we will not be providing, the following categories of legal services:
(a) Securities Law. Securities law advice of any kind, including advice regarding the Company's SEC reporting obligations related to the refinancing (such as the filing of Current Reports on Form 8-K, the disclosure of the Permanent Loan in periodic reports on Form 10-Q or Form 10-K, or the preparation of any prospectus supplement or offering memorandum). For all securities law and SEC reporting matters arising in connection with the refinancing, Fairwater should consult its regular corporate and securities counsel, Crestline & Alderman LLP (Patricia S. Keene, lead partner; One South Street, Suite 2800, Baltimore, Maryland 21202).
(b) Tax Advice. Federal or state income tax advice, including without limitation any matters relating to Fairwater's qualification and status as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), and the requirement under Section 857(a)(1) of the Code to distribute at least ninety percent (90%) of Fairwater's taxable income (determined without regard to the dividends-paid deduction and excluding net capital gain) in the form of dividends to its shareholders. For all tax matters, including any analysis of the tax implications of the Permanent Loan structure, debt modifications, or original issue discount, Fairwater should consult its independent tax advisors and/or Crestline & Alderman LLP.
(c) Regulatory Advice. Regulatory advice of any nature, whether relating to banking, insurance, or other regulated industries. We will not be advising on the regulatory status or compliance obligations of Clarendon Metropolitan, Kensington National Bank, N.A., or any other regulated entity involved in the transaction.
(d) Transfer and Recording Taxes. State and local transfer tax, mortgage recording tax, documentary stamp tax, or intangible tax advice, although we will coordinate with local counsel in each of the five property jurisdictions (Texas, Georgia, Florida, North Carolina, and Tennessee) as needed for the recording of mortgage instruments and other transactional documents, and for the calculation and payment of applicable recording and filing fees.
(e) Environmental, Zoning, and Land Use Matters. Environmental, zoning, land use, entitlement, or other real property regulatory matters, except to the extent of reviewing environmental indemnity agreements, representations, warranties, and covenants contained in the loan documents. Fairwater should rely upon its environmental consultants and local counsel for advice regarding compliance with environmental laws, zoning ordinances, building codes, and land use regulations applicable to the Sun Belt Portfolio properties.
Notwithstanding the foregoing limitations, we will coordinate with Crestline & Alderman LLP as necessary on matters of REIT compliance, corporate governance, and securities disclosure that intersect with or arise out of the financing. We will also coordinate with local counsel in the relevant property states for purposes of recording instruments, filing documents, providing local law opinions, and addressing jurisdiction-specific legal requirements.
4. Staffing
The following attorneys will be primarily responsible for this engagement:
Philip Hartmann, Partner — Responsible Partner. Mr. Hartmann will have overall supervisory responsibility for the engagement and will serve as your primary point of contact at the Firm. Mr. Hartmann has extensive experience representing REITs, institutional investors, and operating companies in CMBS, agency, and balance-sheet commercial real estate financings, and has closed in excess of $15 billion in secured and unsecured real estate credit facilities over the course of his career. He can be reached at (212) 555-4100 or phartmann@calderwoodharkness.com.
Claudia Merritt, Partner — Billing Partner. Ms. Merritt will serve as the billing partner for this engagement and will be available for substantive matters as needed. Ms. Merritt's practice focuses on structured finance and securitization, and she brings particular expertise in CMBS loan documentation, rating agency requirements, and defeasance and yield maintenance mechanics. She can be reached at (212) 555-4215 or cmerritt@calderwoodharkness.com.
Lisa Morrow, Associate — Lead Associate. Ms. Morrow will manage the day-to-day drafting, negotiation, and due diligence workstreams for the engagement. Ms. Morrow has significant experience in commercial real estate finance transactions, including CMBS origination and bridge-to-permanent refinancings. She can be reached at (212) 555-4338 or lmorrow@calderwoodharkness.com.
Marcus Leung, Associate — Working Associate. Mr. Leung will assist with document preparation, due diligence, title and survey review, UCC searches and filings, and closing mechanics. He can be reached at (212) 555-4492 or mleung@calderwoodharkness.com.
Additional attorneys, including paralegals, junior associates, and local counsel in the relevant property states (Texas, Georgia, Florida, North Carolina, and Tennessee), may be engaged as the transaction requires. We will discuss the engagement of any local counsel with you in advance and will seek your approval before incurring material additional staffing costs. To the extent that local counsel is engaged, such counsel will be retained either as sub-counsel to Calderwood & Harkness or directly by Fairwater, as mutually agreed.
5. Billing Rates and Fee Arrangements
Our fees for this engagement will be based on the time spent by the attorneys and other legal professionals working on the matter, billed at the following current hourly rates:
The foregoing rates are the Firm's standard rates as of the date of this Letter. Rates are subject to periodic adjustment, typically on an annual basis effective January 1 of each calendar year. We will provide Fairwater with advance written notice of any rate adjustments. Any rate adjustment will apply prospectively to time incurred after the effective date of the adjustment.
Based on our experience with transactions of comparable size and complexity — specifically, a $240,000,000 CMBS take-out financing secured by a fourteen (14)-property multifamily portfolio located across five states, with simultaneous payoff and discharge of an existing bridge facility — we estimate that our legal fees for this engagement will be in the range of Seven Hundred Fifty Thousand Dollars ($750,000) to One Million One Hundred Thousand Dollars ($1,100,000), exclusive of disbursements, out-of-pocket expenses, and local counsel fees. This estimate is provided for budgeting purposes only and does not constitute a cap, ceiling, or fixed-fee arrangement. Actual fees may be higher or lower than the estimated range depending on range factors, including the complexity and duration of negotiations with Clarendon Metropolitan and Ashworth McPhail LLP, the number of document drafts and revision cycles, the severity and complexity of title issues identified during the review process, the extent of rating agency involvement and requirements, the need for supplemental or amended opinions, and other unforeseen circumstances. We will endeavor to keep you apprised of the status of fees as the engagement progresses and will promptly advise you if we anticipate that fees will materially exceed the upper end of the estimated range.
6. Expenses and Disbursements
In addition to legal fees, Fairwater will be responsible for reimbursement of reasonable out-of-pocket expenses and disbursements incurred by the Firm in connection with the engagement, including but not limited to the following:
•  Filing fees, including UCC filing fees, Secretary of State filing and search fees, county recording fees, and other governmental filing charges;
•  Title search costs and title insurance premium charges, to the extent not paid directly by Fairwater or by the title insurance company pursuant to separate arrangements;
•  Travel expenses, including transportation (airfare, rail, ground transportation), lodging, and meals, for any required property visits, in-person negotiations, or in-person closings (travel will be at coach/economy class unless otherwise agreed, and lodging will be at standard business-class hotels);
•  Courier, overnight delivery (e.g., Severin Partners LLC, Halcyon Partners LLC), and postage costs;
•  Photocopying, printing, scanning, and document reproduction charges;
•  Computerized legal research charges (e.g., Westmark Data Systems, Sundial Solutions, Cascade Services Inc.);
•  Long-distance telephone and conference call charges;
•  Fees and expenses of local counsel retained in Texas, Georgia, Florida, North Carolina, and Tennessee in connection with the recording of instruments, local law opinions, and jurisdiction-specific matters (which will be billed through our invoices or separately by local counsel directly to Fairwater, as mutually agreed).
All expenses will be billed at actual cost without markup. We will seek Fairwater's prior approval before incurring any single expense item in excess of Five Thousand Dollars ($5,000), except where such expense is required on an expedited basis in connection with an imminent closing or filing deadline.
7. Billing and Payment Terms
We will render monthly invoices for professional fees and disbursements incurred during the preceding calendar month. Each invoice will provide a summary of fees by timekeeper, a description of services rendered, and an itemization of disbursements. Invoices will be transmitted electronically in PDF format unless Fairwater requests hard-copy originals.
All invoices are due and payable within thirty (30) days of the invoice date. Payments should be made by wire transfer or check to the Firm's designated account, as set forth on the invoice. All invoices will reference Matter No. 1036-00001 and should be directed to:
Naomi T. Sinclair Chief Financial Officer Fairwater Real Estate Investment Trust 8400 Chesapeake Center Drive, Suite 1200 Columbia, Maryland 21044
Email: nsinclair@fairwaterreit.com
If Fairwater has any questions or disputes regarding any invoice, we ask that you contact Claudia Merritt promptly so that the matter can be discussed and resolved in a timely manner. The existence of a billing question or dispute with respect to any portion of an invoice shall not relieve Fairwater of the obligation to pay the undisputed portion of such invoice within the thirty (30)-day payment period.
8. Client Identity and Conflicts
For purposes of this engagement, our client is Fairwater Real Estate Investment Trust and, solely in connection with this matter, we will also represent the interests of Fairwater OP, Fairwater Residential Management LLC, and the fourteen SPE borrower subsidiaries (Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC) to the extent necessary to effectuate the Take-Out Financing. Notwithstanding the foregoing, we understand that our attorney-client relationship is with Fairwater REIT, and any advice rendered to or communications with officers and employees of Fairwater OP, Fairwater Residential Management LLC, or the SPE borrower subsidiaries are provided in furtherance of our representation of Fairwater REIT. In the event that any conflict of interest were to arise among Fairwater REIT, Fairwater OP, or any of the SPE borrower subsidiaries, we would promptly advise you and discuss appropriate steps, which could include the engagement of separate counsel for one or more of such entities.
Prior to issuing this Letter, we have conducted a conflicts check with respect to the parties currently known to be involved in or related to this transaction, including Fairwater Real Estate Investment Trust, Fairwater Operating Partnership, L.P., Fairwater Residential Management LLC, Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC, Clarendon Metropolitan Insurance Company, Kensington National Bank, N.A., Pinnacle Trust Company, Greystone Commerce Bank, Redfield Capital Markets, LLC, Beacon Ridge Capital Advisors LLC, Ashworth McPhail LLP, Halcourt Briggs & Devlin LLP, Meridian Sunstone Holdings LLC, and Marlowe Asset Management Title Insurance Group, Inc. Based on our review, no conflicts of interest have been identified that would preclude or materially limit our representation of Fairwater in connection with this engagement. We will conduct additional conflicts checks as new parties, counterparties, or other interested persons are identified during the course of the transaction, and we will promptly advise you of any potential conflicts that may arise.
We note that, in the ordinary course of our practice, Calderwood & Harkness has in the past represented, and may in the future represent, one or more of the entities identified above (other than Fairwater and its affiliates) in matters unrelated to this engagement. By countersigning this Letter, Fairwater acknowledges that the Firm's representation of Fairwater in connection with this matter does not preclude the Firm from representing other clients (including parties to this transaction) in matters that are not substantially related to this engagement, provided that such other representations do not involve the assertion of a position adverse to Fairwater with respect to the subject matter of this engagement.
9. Confidentiality
All information received from Fairwater or its affiliates, officers, employees, agents, or advisors in connection with this engagement will be treated as confidential in accordance with the Firm's professional and ethical obligations, subject to applicable law and the terms of any confidentiality or non-disclosure agreements to which the Firm may be a party. We will maintain appropriate physical, electronic, and administrative safeguards to protect the confidentiality of client information.
We will not disclose confidential client information to third parties without Fairwater's prior written consent, except (a) as required by law, court order, or the rules of professional conduct, (b) as reasonably necessary for the performance of our services in connection with this engagement (including, without limitation, disclosure to local counsel, title insurance companies, or in connection with the preparation and delivery of legal opinions), or (c) as impliedly authorized in order to carry out the representation. To the extent that we engage local counsel or other third-party service providers in connection with this matter, we will ensure that such parties are bound by appropriate confidentiality obligations.
10. Document Retention
Following the conclusion of this engagement (whether by closing, termination, or otherwise), we will retain client files in accordance with the Firm's document retention policies, which generally provide for the retention of significant transactional documents — including executed closing documents, legal opinions, and material correspondence — for a period of ten (10) years following the closing of the transaction. Working papers, drafts, and internal memoranda may be retained for shorter periods as determined by the Firm's policies.
Original documents will be returned to Fairwater upon written request at any time during or after the engagement. Upon the expiration of the applicable retention period, the Firm reserves the right to destroy or dispose of client files without further notice, unless Fairwater has previously requested the return of such files.
11. Termination
Either Fairwater or the Firm may terminate this engagement at any time upon written notice to the other party. Any such termination will be subject to the applicable rules of professional responsibility governing withdrawal from representation, including the obligation to provide reasonable notice and to take steps to protect the client's interests during any transition period.
In the event of termination, Fairwater will be responsible for payment of all fees and expenses incurred through the date of termination, in accordance with the billing and payment terms set forth in this Letter. Upon termination, we will promptly deliver to Fairwater (or to successor counsel designated by Fairwater) all client files, documents, and property in our possession relating to this engagement, subject to the Firm's right to retain copies for its records and conflict-checking purposes.
12. Governing Law
This engagement letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflict of laws that would require the application of the laws of any other jurisdiction. Any dispute arising out of or relating to this engagement or this Letter shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the County of New York, or the United States District Court for the Southern District of New York.
13. No Guarantee of Outcome
While we will use our best professional efforts in representing Fairwater in connection with the Take-Out Financing, we cannot and do not guarantee any particular outcome with respect to the negotiation, documentation, or closing of the Permanent Loan, the terms and conditions thereof, or the timing of the transaction. The successful completion of the Take-Out Financing will depend on a number of factors beyond our control, including the willingness of the lender to agree to acceptable terms, the satisfaction of closing conditions, the resolution of title and survey issues, and market conditions. Our undertaking is to provide competent and diligent legal representation, not to ensure any specific result.
14. Acceptance and Countersignature
We are enthusiastic about the opportunity to represent Fairwater in connection with this significant refinancing transaction, and we look forward to working with you, Ms. Sinclair, Ms. Donahue, and the broader Fairwater team to bring the Take-Out Financing to a successful closing.
If the terms of this engagement are acceptable, please confirm Fairwater's agreement by having an authorized representative sign and return a copy of this Letter to the undersigned. A countersigned copy may be returned by email (in PDF format) or by hand delivery or overnight courier. This Letter will become effective upon receipt of the executed counterpart.
Please do not hesitate to contact me if you have any questions regarding the terms of this Letter or any aspect of the engagement. I can be reached at (212) 555-4100 or phartmann@calderwoodharkness.com.
We appreciate the confidence you have placed in Calderwood & Harkness, and we look forward to a productive engagement.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Philip Hartmann Partner, Banking & Finance Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022
ACKNOWLEDGED AND AGREED:
By signing below, the undersigned, on behalf of Fairwater Real Estate Investment Trust, confirms that Fairwater has reviewed and agrees to the terms and conditions of this engagement letter, and authorizes Calderwood & Harkness LLP to proceed with the engagement described herein.
FAIRWATER REAL ESTATE INVESTMENT TRUST
By: ________
Name: David A. Whitfield
Title: General Counsel
Date: ________
Enclosures:
1.  Firm Privacy Notice
2.  Standard Terms of Engagement
cc: (via email)
Jonathan R. Calder, Chief Executive Officer, Fairwater Real Estate Investment Trust Naomi T. Sinclair, Chief Financial Officer, Fairwater Real Estate Investment Trust Rachel S. Donahue, Senior Vice President — Capital Markets, Fairwater Real Estate Investment Trust Claudia Merritt, Partner, Calderwood & Harkness LLP Lisa Morrow, Associate, Calderwood & Harkness LLP
Timekeeper | Title | Rate (per hour)
Philip Hartmann | Partner | $1,500
Claudia Merritt | Partner | $1,450
Other Partners (if applicable) | Partner | $1,350 – $1,550
Lisa Morrow | Senior Associate | $1,050
Other Senior Associates (if applicable) | Senior Associate | $950 – $1,100
Marcus Leung | Junior Associate | $825
Other Junior Associates (if applicable) | Junior Associate | $725 – $875
Paralegals | Paralegal | $375 – $475

PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP

ACKNOWLEDGED AND AGREED:

FAIRWATER REAL ESTATE INVESTMENT TRUST

Record

Parties

Dates

Amounts