1036-00001 · Banking & Finance practice group · Term Sheet & Commitment

loan-application-cover-letter.docx DOCUMENT Finance & Banking

23 / 36 ← → ✕

Contract analysis Extract to table

CONFIDENTIAL

FAIRWATER OPERATING PARTNERSHIP, L.P. 8400 Chesapeake Center Drive, Suite 1200 Columbia, Maryland 21044

September 15, 2025

Clarendon Metropolitan Insurance Company 1 MetroTech Center Brooklyn, New York 11201

Attention: Garrett W. Hollister

Head of CMBS Originations

Re: Application for $240,000,000 Fixed-Rate Mortgage Loan — Sun Belt Portfolio (14 Multifamily Properties) Term Sheet dated August 25, 2025 Rate Lock Deposit Reference Number: CL-CMBS-2025-09-0347

Dear Mr. Hollister:

This letter is submitted on behalf of Fairwater Operating Partnership, L.P. ("Fairwater OP"), a Delaware limited partnership that serves as the operating partnership through which Fairwater Real Estate Investment Trust, a Maryland real estate investment trust listed on the New York Stock Exchange (ticker: FWTR) ("Fairwater REIT" or the "Guarantor"), conducts substantially all of its business operations, including the ownership, management, and financing of multifamily residential properties. This letter transmits the formal loan application and all accompanying materials in connection with the proposed $240,000,000 permanent fixed-rate mortgage loan (the "Proposed Loan") to be secured by the Sun Belt Portfolio (as defined below), as contemplated by the term sheet dated August 25, 2025 executed by Fairwater OP and Clarendon Metropolitan Insurance Company ("Clarendon Metropolitan" or the "Lender") (the "Term Sheet").

Fairwater OP is the sole member of each of the fourteen (14) special-purpose entity borrowers (collectively, the "SPE Borrowers" or "Co-Borrowers") that will serve as co-borrowers under the Proposed Loan. Each SPE Borrower is a Delaware limited liability company organized for the purpose of holding title to, and operating, the individual multifamily property allocated to it, as more fully described in Section 2 below.

Fairwater OP and Fairwater REIT have retained Calderwood & Harkness LLP as borrower's counsel in connection with this financing. Philip Hartmann serves as the Responsible Partner and Lisa Morrow serves as Lead Associate on this engagement, and their offices are located at 425 Park Avenue, New York, New York 10022 (Matter No. 1036-00001). Calderwood & Harkness LLP is fully authorized to communicate with Clarendon Metropolitan and its counsel, Ashworth McPhail LLP (Joanna C. Wexler), on behalf of Fairwater OP and the SPE Borrowers in connection with all matters arising out of or relating to this application and the Proposed Loan. In addition, Beacon Ridge Capital Advisors LLC serves as financial advisor to Fairwater in connection with this financing; the primary contact at Beacon Ridge is Dennis P. Nakamura, Partner, whose offices are located at 300 Park Avenue, Suite 1800, New York, New York 10022. Mr. Nakamura is authorized to discuss financial and structural aspects of the Proposed Loan with Clarendon Metropolitan and its representatives.

We respectfully request that Clarendon Metropolitan review the enclosed materials at its earliest convenience and confirm receipt of this application and the accompanying rate lock deposit. The following sections of this letter provide a summary of the background and key terms of the Proposed Loan, a description of the collateral portfolio, borrower entity information, a detailed list of all enclosed materials, and contact information for the relevant parties.

1. Background and Transaction Summary

Fairwater REIT, through Fairwater OP and the SPE Borrowers, acquired a portfolio of fourteen (14) multifamily residential communities located across the southeastern United States (collectively, the "Sun Belt Portfolio") on June 30, 2025 from Meridian Sunstone Holdings LLC, an unaffiliated third-party seller. The aggregate purchase price for the Sun Belt Portfolio was $385,000,000 (Three Hundred Eighty-Five Million Dollars).

The acquisition was financed with a combination of debt and equity as follows:

(a) Bridge Loan Proceeds: $240,000,000, representing approximately 62.34% of the total purchase price, provided under a bridge credit facility from a syndicate of lenders led by Kensington National Bank, N.A., as administrative agent (the "Bridge Facility"); and

(b) Cash Equity: $145,000,000, representing approximately 37.66% of the total purchase price, funded from Fairwater REIT's balance sheet resources and operating partnership unit issuances by Fairwater OP to certain institutional investors.

The Bridge Facility bears interest at a floating rate equal to the Secured Overnight Financing Rate ("SOFR") plus 500 basis points. Based on the current 30-day Term SOFR rate of 4.33%, the all-in interest rate on the Bridge Facility is 9.33%. The Bridge Facility is structured as an interest-only facility with no scheduled amortization, and the full $240,000,000 in principal remains outstanding as of the date of this letter. The Bridge Facility matures on December 31, 2025, and Fairwater OP does not have an option to extend the maturity date.

Accordingly, Fairwater seeks permanent take-out financing through the Proposed Loan to replace the Bridge Facility in full, thereby eliminating the near-term maturity risk and the significant floating-rate interest expense associated with the bridge financing. The Proposed Loan, as reflected in the Term Sheet, contemplates a fixed interest rate of 6.25% per annum, a ten (10)-year term, and a thirty (30)-year amortization schedule, which would generate projected monthly payments of principal and interest of approximately $1,477,846 and projected annual debt service of approximately $17,734,152. Based on the Sun Belt Portfolio's trailing-twelve-month net operating income of $26,180,000 at acquisition, the projected debt service coverage ratio ("DSCR") under the Proposed Loan is approximately 1.476x, which represents a healthy coverage level consistent with Clarendon Metropolitan's underwriting standards for CMBS multifamily loans of this nature.

The Board of Trustees of Fairwater REIT reviewed and approved the proposed permanent financing at a duly convened meeting held on September 8, 2025, and adopted resolutions authorizing the officers of Fairwater REIT, acting in its capacity as general partner of Fairwater OP, to negotiate, execute, and deliver all documents and instruments necessary or appropriate in connection with the Proposed Loan. A certified copy of such board resolutions is included among the enclosed materials.

Fairwater OP targets a closing date for the Proposed Loan on or before November 28, 2025, which is approximately thirty-three (33) days ahead of the December 31, 2025 maturity date of the Bridge Facility. This targeted closing date is intended to provide a reasonable cushion to ensure a smooth transition from bridge to permanent financing and to allow sufficient time for any post-closing administrative matters.

2. The Sun Belt Portfolio

The Sun Belt Portfolio comprises fourteen (14) multifamily residential communities totaling approximately 4,200 apartment units located across five (5) states in the Sun Belt region of the United States. The portfolio is diversified by geography, vintage, and unit count, and is situated in high-growth metropolitan statistical areas with favorable demographic trends, strong employment growth, and sustained in-migration patterns. The geographic distribution of the portfolio is summarized as follows:

• Texas: 5 properties, approximately 1,600 units (located in Austin, San Antonio, Katy, Sugar Land, and Frisco)

• Georgia: 3 properties, approximately 820 units (located in Alpharetta, Smyrna, and Duluth)

• Florida: 3 properties, approximately 860 units (located in Tampa, Orlando, and Jacksonville)

• North Carolina: 2 properties, approximately 540 units (located in Charlotte and Raleigh)

• Tennessee: 1 property, approximately 380 units (located in Nashville)

At the time of acquisition on June 30, 2025, the weighted average physical occupancy across all fourteen properties was 93.7%, reflecting strong demand fundamentals in each of the portfolio's submarkets. The trailing-twelve-month net operating income ("TTM NOI") for the portfolio at acquisition was $26,180,000, resulting in an acquisition capitalization rate of 6.80% ($26,180,000 ÷ $385,000,000). The aggregate appraised value of the fourteen properties at acquisition was $385,000,000, yielding a proposed loan-to-value ratio of 62.34% ($240,000,000 ÷ $385,000,000).

All fourteen properties are managed by Fairwater Residential Management LLC ("FRML"), an affiliate of Fairwater REIT (EIN 52-2953810), under property management agreements entered into with each SPE Borrower effective as of July 1, 2025. FRML has extensive experience managing Class A and Class B+ multifamily communities across the Mid-Atlantic and Southeast regions, and currently manages all of Fairwater REIT's approximately 18,400-unit portfolio.

Property Schedule. The following table provides summary information for each of the fourteen properties comprising the Sun Belt Portfolio. Complete property information packages, including rent rolls, operating statements, capital expenditure histories, market data, and demographic reports, are included among the enclosed materials (see Section 6.F below).

Each of the fourteen SPE Borrowers identified in the table above is a Delaware limited liability company wholly owned by Fairwater Operating Partnership, L.P. Copies of each SPE Borrower's certificate of formation, current operating agreement, and certificate of good standing are included among the enclosed materials. As noted in Section 3 below, the operating agreements for each SPE Borrower will be amended and restated prior to closing to incorporate the standard CMBS special-purpose entity covenants required by Clarendon Metropolitan.

3. Proposed Loan Terms Summary

Set forth below is a summary of the principal terms and conditions of the Proposed Loan, as reflected in the Term Sheet dated August 25, 2025. This summary is intended for reference purposes only and is qualified in its entirety by the terms of the Term Sheet and the definitive loan documents to be negotiated and executed by the parties.

Proposed Lender: Clarendon Metropolitan Insurance Company

Proposed Borrowers: Fairwater Sun Belt I LLC, Fairwater Sun Belt II LLC, Fairwater Sun Belt III LLC, Fairwater Sun Belt IV LLC, Fairwater Sun Belt V LLC, Fairwater Sun Belt VI LLC, Fairwater Sun Belt VII LLC, Fairwater Sun Belt VIII LLC, Fairwater Sun Belt IX LLC, Fairwater Sun Belt X LLC, Fairwater Sun Belt XI LLC, Fairwater Sun Belt XII LLC, Fairwater Sun Belt XIII LLC, and Fairwater Sun Belt XIV LLC, as co-borrowers

Carve-Out Guarantor: Fairwater Real Estate Investment Trust

Loan Amount: $240,000,000

Interest Rate: 6.25% per annum, fixed for the full term

Term: Ten (10) years; anticipated closing in November 2025 with maturity in November 2035

Amortization: Thirty (30)-year schedule; monthly payments of principal and interest of approximately $1,477,846

Annual Debt Service: Approximately $17,734,152

DSCR at Current NOI: Approximately 1.476x ($26,180,000 ÷ $17,734,152)

Loan-to-Value: 62.34% ($240,000,000 ÷ $385,000,000)

Structure: Non-recourse with standard CMBS carve-out guaranty (the Carve-Out Guarantor shall guarantee the Borrowers' obligations with respect to customary "bad boy" acts and environmental indemnity obligations)

Prepayment: No prepayment or defeasance permitted during the initial two (2)-year lockout period (through approximately November 2027); defeasance permitted thereafter using U.S. Treasury obligations through the date that is ninety (90) days prior to the stated maturity date; open prepayment permitted during the final ninety (90) days of the term

Origination Fee: 0.75% of the Loan Amount ($1,800,000), payable at closing

Collateral:

(i) First-priority mortgage liens (or deeds of trust, as applicable) on all fourteen (14) properties comprising the Sun Belt Portfolio;

(ii) Assignment of leases and rents for all fourteen properties;

(iii) Pledge of 100% of the equity interests in each of the fourteen SPE Borrowers;

(iv) Assignment of all property management agreements between the SPE Borrowers and Fairwater Residential Management LLC; and

(v) Such other security interests, assignments, and pledges as may be customary for CMBS multifamily loans of this nature.

Governing Law: State of New York

The foregoing terms are subject in all respects to the negotiation and execution of definitive loan documents satisfactory to Clarendon Metropolitan and its counsel, including, without limitation, a promissory note, mortgage or deed of trust instruments for each property, a loan agreement, an assignment of leases and rents, environmental indemnity agreements, guaranty agreements, and such other documents and instruments as Clarendon Metropolitan may reasonably require.

4. Rate Lock Deposit

In accordance with the Term Sheet and the requirements of Clarendon Metropolitan's CMBS origination process, Fairwater OP has caused to be transmitted to Clarendon Metropolitan a rate lock deposit in the amount of $2,400,000 (Two Million Four Hundred Thousand Dollars), representing 1.00% of the proposed $240,000,000 loan amount. Enclosed herewith is the wire transfer confirmation evidencing the transmission of such deposit. The rate lock deposit has been assigned reference number CL-CMBS-2025-09-0347 by Clarendon Metropolitan.

The rate lock deposit shall be held by Clarendon Metropolitan and governed by the terms and conditions set forth in the Rate Lock Deposit Side Letter Agreement (the "Side Letter"), a fully executed copy of which is enclosed with this application. In accordance with the Side Letter, the rate lock deposit is fully refundable at closing and shall be applied as a credit against closing costs, including the origination fee and other fees and expenses payable by the Borrowers at closing. In the event that the Proposed Loan does not close for any reason other than a default by the Borrowers, the deposit shall be returned to Fairwater OP in accordance with the terms of the Side Letter.

Fairwater OP respectfully requests that Clarendon Metropolitan acknowledge receipt of the rate lock deposit and confirm that the interest rate of 6.25% per annum has been locked as of the date hereof, subject to the terms and conditions of the Term Sheet and the Side Letter.

5. Borrower Entity Information

Set forth below is a summary of the organizational and financial information for Fairwater REIT, Fairwater OP, and the SPE Borrowers, as well as other relevant entity information pertaining to the Proposed Loan.

Fairwater Real Estate Investment Trust (Carve-Out Guarantor)

Entity Type: Maryland real estate investment trust

Employer Identification Number (EIN): 52-2847193

Maryland SDAT Entity ID: D19483726

Headquarters: 8400 Chesapeake Center Drive, Suite 1200, Columbia, Maryland 21044

Stock Exchange Listing: New York Stock Exchange; Ticker: FWTR

Approximate Market Capitalization: $1.85 billion (as of September 12, 2025)

Approximate Total Enterprise Value: $3.2 billion

Fiscal Year End: December 31

REIT Status: Fairwater REIT has elected to be treated as a real estate investment trust for federal income tax purposes pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, Fairwater is required to distribute at least 90% of its taxable income to its shareholders annually in the form of dividends, which requirement Fairwater has satisfied for each fiscal year since its initial REIT election.

Key Officers:

• Jonathan R. Calder — Chief Executive Officer

• Naomi T. Sinclair — Chief Financial Officer

• David A. Whitfield — General Counsel and Secretary

• Rachel S. Donahue — Senior Vice President, Capital Markets

Existing Portfolio: As of the date of this letter, Fairwater REIT's portfolio comprises sixty-two (62) multifamily residential communities containing approximately 18,400 apartment units located across the Mid-Atlantic and Southeast United States, including the fourteen properties comprising the Sun Belt Portfolio.

Consolidated Total Debt (Pre-Bridge): Prior to the incurrence of the Bridge Facility, Fairwater REIT's consolidated total indebtedness was approximately $1,480,000,000, consisting of a combination of secured mortgage loans, term loans, and unsecured revolving credit facilities.

Independent Auditors: Whitmore Hargrove & Co., P.C. (Christine M. Rowley, Lead Engagement Partner), 100 International Drive, Suite 1500, Baltimore, Maryland 21202

Fairwater Operating Partnership, L.P.

Entity Type: Delaware limited partnership

Employer Identification Number (EIN): 52-2847201

General Partner: Fairwater Real Estate Investment Trust (holding a 99.2% partnership interest)

Limited Partners: Various institutional and individual holders of operating partnership units (holding an aggregate 0.8% partnership interest)

Fairwater OP is the entity through which Fairwater REIT conducts substantially all of its real estate operations, including the acquisition, ownership, financing, management, and disposition of multifamily residential properties. Fairwater OP is the sole member of each of the fourteen SPE Borrowers.

SPE Co-Borrowers. Each of the fourteen SPE Borrowers identified in Section 2 above is a Delaware limited liability company formed for the specific purpose of holding title to, and operating, its respective multifamily property. Each SPE is wholly owned by Fairwater OP as its sole member. Organizational documents for each SPE Borrower, including certificates of formation, current operating agreements, good standing certificates from the Delaware Secretary of State (dated within 30 days of this application), and foreign qualification certificates in the applicable property state (Texas, Georgia, Florida, North Carolina, or Tennessee, as applicable), are included among the enclosed materials.

As noted above, the operating agreements of the SPE Borrowers will be amended and restated prior to closing to incorporate the standard CMBS special-purpose entity covenants required by Clarendon Metropolitan, including restrictions on additional indebtedness, maintenance of separateness from affiliates, requirements for independent directors or springing members, and other customary bankruptcy-remoteness provisions.

6. List of Enclosures

The following materials are enclosed with this application for Clarendon Metropolitan's review. Each set of enclosed materials is organized and tabbed in the order set forth below:

A. Loan Application Form

1. Completed Clarendon Metropolitan CMBS Loan Application form, executed by Naomi T. Sinclair, CFO, on behalf of Fairwater OP.

B. Rate Lock Deposit

2. Wire transfer confirmation for the $2,400,000 rate lock deposit (reference number CL-CMBS-2025-09-0347).

3. Fully executed Rate Lock Deposit Side Letter Agreement between Fairwater Operating Partnership, L.P. and Clarendon Metropolitan Insurance Company.

C. Organizational Documents for SPE Borrowers

4. Certificates of Formation for each of Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC (14 certificates), as filed with the Delaware Secretary of State.

5. Current Operating Agreements for each of the 14 SPE LLCs (to be amended and restated prior to closing to incorporate CMBS SPE covenants as required by the Lender).

6. Certificates of Good Standing from the Delaware Secretary of State for each of the 14 SPE LLCs (each dated within 30 days of this application).

7. Foreign qualification certificates for each SPE Borrower in its respective property state, as follows:

(a) Texas: Fairwater Sun Belt I LLC, Fairwater Sun Belt II LLC, Fairwater Sun Belt III LLC, Fairwater Sun Belt IV LLC, and Fairwater Sun Belt V LLC;

(b) Georgia: Fairwater Sun Belt VI LLC, Fairwater Sun Belt VII LLC, and Fairwater Sun Belt VIII LLC;

(d) North Carolina: Fairwater Sun Belt XII LLC and Fairwater Sun Belt XIII LLC; and

(e) Tennessee: Fairwater Sun Belt XIV LLC.

D. Organizational Documents for Guarantor and Operating Partnership

8. Declaration of Trust of Fairwater Real Estate Investment Trust, as amended, filed with the Maryland State Department of Assessments and Taxation.

9. Bylaws of Fairwater Real Estate Investment Trust, as amended and restated.

10. Certificate of Good Standing for Fairwater Real Estate Investment Trust issued by the Maryland State Department of Assessments and Taxation (SDAT Entity ID D19483726).

11. Certificate of Limited Partnership for Fairwater Operating Partnership, L.P., as filed with the Delaware Secretary of State.

12. Third Amended and Restated Agreement of Limited Partnership of Fairwater Operating Partnership, L.P.

13. Certificate of Good Standing for Fairwater Operating Partnership, L.P. from the Delaware Secretary of State.

E. Board Authorization

14. Certified copy of Resolutions of the Board of Trustees of Fairwater Real Estate Investment Trust, adopted at a duly convened meeting held on September 8, 2025, authorizing the execution and delivery of loan documents in connection with the permanent financing of the Sun Belt Portfolio.

F. Property Information Packages (for each of the 14 properties)

15. Property summary and description (including location, site area, unit mix, amenities, and competitive positioning) for each of the 14 properties.

16. Current rent rolls for each of the 14 properties (as of August 31, 2025).

17. Trailing-twelve-month operating statements for each of the 14 properties (covering the period July 2024 through June 2025).

18. Year-to-date operating statements for each of the 14 properties (covering the period January 2025 through August 2025).

19. Capital expenditure history (covering the three most recent fiscal years) and projected capital expenditure budgets for each of the 14 properties.

20. Market-area demographic reports and comparable property data for each submarket in which the properties are located.

G. Appraisals.

21. Note: Independent MAI appraisals are currently being prepared by Thornfield Appraisal Group LLC (3100 Cumberland Boulevard, Suite 600, Atlanta, Georgia 30339) for each of the 14 properties comprising the Sun Belt Portfolio. The appraisals are expected to be completed and delivered to Clarendon Metropolitan under separate cover in October 2025. Each appraisal will be addressed to Clarendon Metropolitan Insurance Company and its successors and assigns and will be prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and the requirements of the Lender's CMBS origination guidelines.

H. Financial Statements of Guarantor

22. Audited consolidated financial statements of Fairwater Real Estate Investment Trust for the fiscal year ended December 31, 2024, together with the report of independent auditors (Whitmore Hargrove & Co., P.C.).

23. Audited consolidated financial statements of Fairwater Real Estate Investment Trust for the fiscal year ended December 31, 2023, together with the report of independent auditors (Whitmore Hargrove & Co., P.C.).

24. Audited consolidated financial statements of Fairwater Real Estate Investment Trust for the fiscal year ended December 31, 2022, together with the report of independent auditors (Whitmore Hargrove & Co., P.C.).

25. Unaudited quarterly financial statements of Fairwater Real Estate Investment Trust for the fiscal quarter ended March 31, 2025 (Q1 2025).

26. Unaudited quarterly financial statements of Fairwater Real Estate Investment Trust for the fiscal quarter ended June 30, 2025 (Q2 2025).

27. Consolidated schedule of real estate assets and indebtedness of Fairwater Real Estate Investment Trust (as of June 30, 2025).

I. Title and Survey

28. Pro forma title commitments issued by Marlowe Asset Management Title Insurance Group, Inc. (901 Main Street, Suite 1100, Dallas, Texas 75202) for each of the 14 properties. Note: Final lender's title insurance policies, including all CMBS endorsements required by the Lender, will be issued and delivered at closing.

29. Existing ALTA/NSPS land title surveys for each of the 14 properties, obtained in connection with the acquisition on June 30, 2025. Note: Updated surveys are being ordered from the original surveying firms and will be delivered to the Lender and its counsel prior to closing.

J. Environmental Reports

30. Phase I Environmental Site Assessment reports for each of the 14 properties, prepared in connection with Fairwater's acquisition of the Sun Belt Portfolio. Note: If the Lender requires updated Phase I reports or supplemental environmental assessments, Fairwater will promptly arrange for the preparation and delivery of such reports.

K. Insurance Information

31. Current certificates of property and casualty insurance for the Sun Belt Portfolio, evidencing coverage in force for all 14 properties.

32. Schedule of insurance coverage, including policy limits, deductibles, named insureds, and carrier information for all property, general liability, umbrella, flood, and earthquake (as applicable) policies.

L. Property Management

33. Copies of the property management agreements between each SPE Borrower and Fairwater Residential Management LLC, each effective as of July 1, 2025.

M. Existing Indebtedness

34. Summary of the existing $240,000,000 bridge credit facility dated June 30, 2025, with Kensington National Bank, N.A. as administrative agent, including the following information:

(a) Current outstanding principal: $240,000,000 (no amortization; interest-only structure);

(b) Interest rate: SOFR + 500 basis points (current all-in rate of 9.33%);

(d) Syndicate composition:

• Kensington National Bank, N.A. (Administrative Agent) — $96,000,000 (40.00%)

• Pinnacle Trust Company — $60,000,000 (25.00%)

• Greystone Commerce Bank — $48,000,000 (20.00%)

• Redfield Capital Markets, LLC — $36,000,000 (15.00%)

35. Copy of the Bridge Credit Agreement dated June 30, 2025, among the SPE Borrowers, Fairwater Operating Partnership, L.P. as guarantor, Kensington National Bank, N.A. as administrative agent, and the lenders party thereto.

N. Legal Counsel Information

36. Contact information for borrower's counsel:

Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022 Philip Hartmann, Responsible Partner Lisa Morrow, Lead Associate Matter No. 1036-00001

37. Contact information for borrower's corporate/securities counsel:

Crestline & Alderman LLP One South Street, Suite 2800 Baltimore, Maryland 21202 Patricia S. Keene, Lead Partner

7. Contact Information and Requested Next Steps

For purposes of all communications relating to this application and the Proposed Loan, the primary contact persons for Fairwater are as follows:

Primary Business Contacts:

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

Rachel S. Donahue Senior Vice President, Capital Markets Fairwater Real Estate Investment Trust 8400 Chesapeake Center Drive, Suite 1200 Columbia, Maryland 21044

All communications should be directed to Ms. Sinclair, with a copy to Ms. Donahue.

Legal Counsel Contact:

Philip Hartmann Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022 Matter No. 1036-00001

Financial Advisor Contact:

Dennis P. Nakamura, Partner Beacon Ridge Capital Advisors LLC 300 Park Avenue, Suite 1800 New York, New York 10022

We respectfully request the following:

1. Confirmation of Receipt. We request that Clarendon Metropolitan confirm receipt of this application, all accompanying enclosures, and the $2,400,000 rate lock deposit (reference number CL-CMBS-2025-09-0347).

2. Issuance of Commitment Letter. We request that Clarendon Metropolitan proceed with its underwriting review and issue a commitment letter for the Proposed Loan as promptly as practicable, targeting a commitment date of October 1, 2025, consistent with the timeline discussed by the parties during the term sheet negotiation process.

3. Target Closing Date. Fairwater desires to proceed expeditiously toward a closing of the Proposed Loan on or before November 28, 2025, which is approximately thirty-three (33) days in advance of the December 31, 2025 maturity date of the Bridge Facility. Meeting this closing deadline is of significant importance to Fairwater in order to ensure the orderly retirement of the bridge financing and to avoid any potential default or extension costs under the Bridge Facility.

4. CMBS Securitization Diligence. We understand that the Proposed Loan is anticipated to be included in the CLRN 2025-C14 CMBS securitization vehicle (indicative designation, subject to final pooling and structuring determinations by Clarendon Metropolitan). We request that Clarendon Metropolitan and Ashworth McPhail LLP advise us, at their earliest convenience, of any additional diligence requirements, documentation deliverables, or representations and warranties that may be required in connection with the securitization process, so that we may begin to address those requirements promptly.

We invite Clarendon Metropolitan and its counsel at Ashworth McPhail LLP to contact Philip Hartmann at Calderwood & Harkness LLP with any questions, requests for additional information, or follow-up inquiries in connection with this application. We look forward to working with you and your team to bring this financing to a successful closing.

Very truly yours,

FAIRWATER OPERATING PARTNERSHIP, L.P.

By: Fairwater Real Estate Investment Trust,

its General Partner

By: ________

Name: Naomi T. Sinclair

Title: Chief Financial Officer

Date: September 15, 2025

cc:

Jonathan R. Calder, Chief Executive Officer, Fairwater Real Estate Investment Trust David A. Whitfield, General Counsel, Fairwater Real Estate Investment Trust Rachel S. Donahue, Senior Vice President, Capital Markets, Fairwater Real Estate Investment Trust Philip Hartmann, Calderwood & Harkness LLP Lisa Morrow, Calderwood & Harkness LLP Dennis P. Nakamura, Beacon Ridge Capital Advisors LLC Joanna C. Wexler, Ashworth McPhail LLP (Permanent Lender's Counsel)

Enclosures (as listed above)

SPE Borrower	Property Name	Location	Units	Year Built	Appraised Value
Fairwater Sun Belt I LLC	Ridgewater at Lakeline	Austin, TX	320	2018	$32,500,000
Fairwater Sun Belt II LLC	Sagebrush Commons	San Antonio, TX	288	2016	$24,800,000
Fairwater Sun Belt III LLC	Cypress Bend	Katy, TX	340	2019	$30,200,000
Fairwater Sun Belt IV LLC	Willowbrook Terrace	Sugar Land, TX	310	2017	$29,100,000
Fairwater Sun Belt V LLC	Heritage at Stonebriar	Frisco, TX	342	2020	$35,800,000
Fairwater Sun Belt VI LLC	Peachtree Crossings	Alpharetta, GA	296	2015	$28,600,000
Fairwater Sun Belt VII LLC	Cumberland Ridge	Smyrna, GA	264	2014	$24,200,000
Fairwater Sun Belt VIII LLC	Sugarloaf Station	Duluth, GA	260	2016	$23,400,000
Fairwater Sun Belt IX LLC	Bayshore Landings	Tampa, FL	308	2017	$33,800,000
Fairwater Sun Belt X LLC	Solara at Millenia	Orlando, FL	292	2018	$30,600,000
Fairwater Sun Belt XI LLC	Riverside Preserve	Jacksonville, FL	260	2015	$22,400,000
Fairwater Sun Belt XII LLC	Stonewall Flats	Charlotte, NC	284	2019	$28,200,000
Fairwater Sun Belt XIII LLC	Crabtree Pointe	Raleigh, NC	256	2017	$26,400,000
Fairwater Sun Belt XIV LLC	Harpeth Valley	Nashville, TN	380	2021	$15,000,000
Total	4,200	$385,000,000

CONFIDENTIAL
FAIRWATER OPERATING PARTNERSHIP, L.P. 8400 Chesapeake Center Drive, Suite 1200 Columbia, Maryland 21044
September 15, 2025
Clarendon Metropolitan Insurance Company 1 MetroTech Center Brooklyn, New York 11201
Attention: Garrett W. Hollister
Head of CMBS Originations
Re: Application for $240,000,000 Fixed-Rate Mortgage Loan — Sun Belt Portfolio (14 Multifamily Properties) Term Sheet dated August 25, 2025 Rate Lock Deposit Reference Number: CL-CMBS-2025-09-0347
Dear Mr. Hollister:
This letter is submitted on behalf of Fairwater Operating Partnership, L.P. ("Fairwater OP"), a Delaware limited partnership that serves as the operating partnership through which Fairwater Real Estate Investment Trust, a Maryland real estate investment trust listed on the New York Stock Exchange (ticker: FWTR) ("Fairwater REIT" or the "Guarantor"), conducts substantially all of its business operations, including the ownership, management, and financing of multifamily residential properties. This letter transmits the formal loan application and all accompanying materials in connection with the proposed $240,000,000 permanent fixed-rate mortgage loan (the "Proposed Loan") to be secured by the Sun Belt Portfolio (as defined below), as contemplated by the term sheet dated August 25, 2025 executed by Fairwater OP and Clarendon Metropolitan Insurance Company ("Clarendon Metropolitan" or the "Lender") (the "Term Sheet").
Fairwater OP is the sole member of each of the fourteen (14) special-purpose entity borrowers (collectively, the "SPE Borrowers" or "Co-Borrowers") that will serve as co-borrowers under the Proposed Loan. Each SPE Borrower is a Delaware limited liability company organized for the purpose of holding title to, and operating, the individual multifamily property allocated to it, as more fully described in Section 2 below.
Fairwater OP and Fairwater REIT have retained Calderwood & Harkness LLP as borrower's counsel in connection with this financing. Philip Hartmann serves as the Responsible Partner and Lisa Morrow serves as Lead Associate on this engagement, and their offices are located at 425 Park Avenue, New York, New York 10022 (Matter No. 1036-00001). Calderwood & Harkness LLP is fully authorized to communicate with Clarendon Metropolitan and its counsel, Ashworth McPhail LLP (Joanna C. Wexler), on behalf of Fairwater OP and the SPE Borrowers in connection with all matters arising out of or relating to this application and the Proposed Loan. In addition, Beacon Ridge Capital Advisors LLC serves as financial advisor to Fairwater in connection with this financing; the primary contact at Beacon Ridge is Dennis P. Nakamura, Partner, whose offices are located at 300 Park Avenue, Suite 1800, New York, New York 10022. Mr. Nakamura is authorized to discuss financial and structural aspects of the Proposed Loan with Clarendon Metropolitan and its representatives.
We respectfully request that Clarendon Metropolitan review the enclosed materials at its earliest convenience and confirm receipt of this application and the accompanying rate lock deposit. The following sections of this letter provide a summary of the background and key terms of the Proposed Loan, a description of the collateral portfolio, borrower entity information, a detailed list of all enclosed materials, and contact information for the relevant parties.
1. Background and Transaction Summary
Fairwater REIT, through Fairwater OP and the SPE Borrowers, acquired a portfolio of fourteen (14) multifamily residential communities located across the southeastern United States (collectively, the "Sun Belt Portfolio") on June 30, 2025 from Meridian Sunstone Holdings LLC, an unaffiliated third-party seller. The aggregate purchase price for the Sun Belt Portfolio was $385,000,000 (Three Hundred Eighty-Five Million Dollars).
The acquisition was financed with a combination of debt and equity as follows:
(a) Bridge Loan Proceeds: $240,000,000, representing approximately 62.34% of the total purchase price, provided under a bridge credit facility from a syndicate of lenders led by Kensington National Bank, N.A., as administrative agent (the "Bridge Facility"); and
(b) Cash Equity: $145,000,000, representing approximately 37.66% of the total purchase price, funded from Fairwater REIT's balance sheet resources and operating partnership unit issuances by Fairwater OP to certain institutional investors.
The Bridge Facility bears interest at a floating rate equal to the Secured Overnight Financing Rate ("SOFR") plus 500 basis points. Based on the current 30-day Term SOFR rate of 4.33%, the all-in interest rate on the Bridge Facility is 9.33%. The Bridge Facility is structured as an interest-only facility with no scheduled amortization, and the full $240,000,000 in principal remains outstanding as of the date of this letter. The Bridge Facility matures on December 31, 2025, and Fairwater OP does not have an option to extend the maturity date.
Accordingly, Fairwater seeks permanent take-out financing through the Proposed Loan to replace the Bridge Facility in full, thereby eliminating the near-term maturity risk and the significant floating-rate interest expense associated with the bridge financing. The Proposed Loan, as reflected in the Term Sheet, contemplates a fixed interest rate of 6.25% per annum, a ten (10)-year term, and a thirty (30)-year amortization schedule, which would generate projected monthly payments of principal and interest of approximately $1,477,846 and projected annual debt service of approximately $17,734,152. Based on the Sun Belt Portfolio's trailing-twelve-month net operating income of $26,180,000 at acquisition, the projected debt service coverage ratio ("DSCR") under the Proposed Loan is approximately 1.476x, which represents a healthy coverage level consistent with Clarendon Metropolitan's underwriting standards for CMBS multifamily loans of this nature.
The Board of Trustees of Fairwater REIT reviewed and approved the proposed permanent financing at a duly convened meeting held on September 8, 2025, and adopted resolutions authorizing the officers of Fairwater REIT, acting in its capacity as general partner of Fairwater OP, to negotiate, execute, and deliver all documents and instruments necessary or appropriate in connection with the Proposed Loan. A certified copy of such board resolutions is included among the enclosed materials.
Fairwater OP targets a closing date for the Proposed Loan on or before November 28, 2025, which is approximately thirty-three (33) days ahead of the December 31, 2025 maturity date of the Bridge Facility. This targeted closing date is intended to provide a reasonable cushion to ensure a smooth transition from bridge to permanent financing and to allow sufficient time for any post-closing administrative matters.
2. The Sun Belt Portfolio
The Sun Belt Portfolio comprises fourteen (14) multifamily residential communities totaling approximately 4,200 apartment units located across five (5) states in the Sun Belt region of the United States. The portfolio is diversified by geography, vintage, and unit count, and is situated in high-growth metropolitan statistical areas with favorable demographic trends, strong employment growth, and sustained in-migration patterns. The geographic distribution of the portfolio is summarized as follows:
•  Texas: 5 properties, approximately 1,600 units (located in Austin, San Antonio, Katy, Sugar Land, and Frisco)
•  Georgia: 3 properties, approximately 820 units (located in Alpharetta, Smyrna, and Duluth)
•  Florida: 3 properties, approximately 860 units (located in Tampa, Orlando, and Jacksonville)
•  North Carolina: 2 properties, approximately 540 units (located in Charlotte and Raleigh)
•  Tennessee: 1 property, approximately 380 units (located in Nashville)
At the time of acquisition on June 30, 2025, the weighted average physical occupancy across all fourteen properties was 93.7%, reflecting strong demand fundamentals in each of the portfolio's submarkets. The trailing-twelve-month net operating income ("TTM NOI") for the portfolio at acquisition was $26,180,000, resulting in an acquisition capitalization rate of 6.80% ($26,180,000 ÷ $385,000,000). The aggregate appraised value of the fourteen properties at acquisition was $385,000,000, yielding a proposed loan-to-value ratio of 62.34% ($240,000,000 ÷ $385,000,000).
All fourteen properties are managed by Fairwater Residential Management LLC ("FRML"), an affiliate of Fairwater REIT (EIN 52-2953810), under property management agreements entered into with each SPE Borrower effective as of July 1, 2025. FRML has extensive experience managing Class A and Class B+ multifamily communities across the Mid-Atlantic and Southeast regions, and currently manages all of Fairwater REIT's approximately 18,400-unit portfolio.
Property Schedule.  The following table provides summary information for each of the fourteen properties comprising the Sun Belt Portfolio. Complete property information packages, including rent rolls, operating statements, capital expenditure histories, market data, and demographic reports, are included among the enclosed materials (see Section 6.F below).
Each of the fourteen SPE Borrowers identified in the table above is a Delaware limited liability company wholly owned by Fairwater Operating Partnership, L.P. Copies of each SPE Borrower's certificate of formation, current operating agreement, and certificate of good standing are included among the enclosed materials. As noted in Section 3 below, the operating agreements for each SPE Borrower will be amended and restated prior to closing to incorporate the standard CMBS special-purpose entity covenants required by Clarendon Metropolitan.
3. Proposed Loan Terms Summary
Set forth below is a summary of the principal terms and conditions of the Proposed Loan, as reflected in the Term Sheet dated August 25, 2025. This summary is intended for reference purposes only and is qualified in its entirety by the terms of the Term Sheet and the definitive loan documents to be negotiated and executed by the parties.
Proposed Lender: Clarendon Metropolitan Insurance Company
Proposed Borrowers: Fairwater Sun Belt I LLC, Fairwater Sun Belt II LLC, Fairwater Sun Belt III LLC, Fairwater Sun Belt IV LLC, Fairwater Sun Belt V LLC, Fairwater Sun Belt VI LLC, Fairwater Sun Belt VII LLC, Fairwater Sun Belt VIII LLC, Fairwater Sun Belt IX LLC, Fairwater Sun Belt X LLC, Fairwater Sun Belt XI LLC, Fairwater Sun Belt XII LLC, Fairwater Sun Belt XIII LLC, and Fairwater Sun Belt XIV LLC, as co-borrowers
Carve-Out Guarantor: Fairwater Real Estate Investment Trust
Loan Amount: $240,000,000
Interest Rate: 6.25% per annum, fixed for the full term
Term: Ten (10) years; anticipated closing in November 2025 with maturity in November 2035
Amortization: Thirty (30)-year schedule; monthly payments of principal and interest of approximately $1,477,846
Annual Debt Service: Approximately $17,734,152
DSCR at Current NOI: Approximately 1.476x ($26,180,000 ÷ $17,734,152)
Loan-to-Value: 62.34% ($240,000,000 ÷ $385,000,000)
Structure: Non-recourse with standard CMBS carve-out guaranty (the Carve-Out Guarantor shall guarantee the Borrowers' obligations with respect to customary "bad boy" acts and environmental indemnity obligations)
Prepayment: No prepayment or defeasance permitted during the initial two (2)-year lockout period (through approximately November 2027); defeasance permitted thereafter using U.S. Treasury obligations through the date that is ninety (90) days prior to the stated maturity date; open prepayment permitted during the final ninety (90) days of the term
Origination Fee: 0.75% of the Loan Amount ($1,800,000), payable at closing
Collateral:
(i) First-priority mortgage liens (or deeds of trust, as applicable) on all fourteen (14) properties comprising the Sun Belt Portfolio;
(ii) Assignment of leases and rents for all fourteen properties;
(iii) Pledge of 100% of the equity interests in each of the fourteen SPE Borrowers;
(iv) Assignment of all property management agreements between the SPE Borrowers and Fairwater Residential Management LLC; and
(v) Such other security interests, assignments, and pledges as may be customary for CMBS multifamily loans of this nature.
Governing Law: State of New York
The foregoing terms are subject in all respects to the negotiation and execution of definitive loan documents satisfactory to Clarendon Metropolitan and its counsel, including, without limitation, a promissory note, mortgage or deed of trust instruments for each property, a loan agreement, an assignment of leases and rents, environmental indemnity agreements, guaranty agreements, and such other documents and instruments as Clarendon Metropolitan may reasonably require.
4. Rate Lock Deposit
In accordance with the Term Sheet and the requirements of Clarendon Metropolitan's CMBS origination process, Fairwater OP has caused to be transmitted to Clarendon Metropolitan a rate lock deposit in the amount of $2,400,000 (Two Million Four Hundred Thousand Dollars), representing 1.00% of the proposed $240,000,000 loan amount. Enclosed herewith is the wire transfer confirmation evidencing the transmission of such deposit. The rate lock deposit has been assigned reference number CL-CMBS-2025-09-0347 by Clarendon Metropolitan.
The rate lock deposit shall be held by Clarendon Metropolitan and governed by the terms and conditions set forth in the Rate Lock Deposit Side Letter Agreement (the "Side Letter"), a fully executed copy of which is enclosed with this application. In accordance with the Side Letter, the rate lock deposit is fully refundable at closing and shall be applied as a credit against closing costs, including the origination fee and other fees and expenses payable by the Borrowers at closing. In the event that the Proposed Loan does not close for any reason other than a default by the Borrowers, the deposit shall be returned to Fairwater OP in accordance with the terms of the Side Letter.
Fairwater OP respectfully requests that Clarendon Metropolitan acknowledge receipt of the rate lock deposit and confirm that the interest rate of 6.25% per annum has been locked as of the date hereof, subject to the terms and conditions of the Term Sheet and the Side Letter.
5. Borrower Entity Information
Set forth below is a summary of the organizational and financial information for Fairwater REIT, Fairwater OP, and the SPE Borrowers, as well as other relevant entity information pertaining to the Proposed Loan.
Fairwater Real Estate Investment Trust (Carve-Out Guarantor)
Entity Type: Maryland real estate investment trust
Employer Identification Number (EIN): 52-2847193
Maryland SDAT Entity ID: D19483726
Headquarters: 8400 Chesapeake Center Drive, Suite 1200, Columbia, Maryland 21044
Stock Exchange Listing: New York Stock Exchange; Ticker: FWTR
Approximate Market Capitalization: $1.85 billion (as of September 12, 2025)
Approximate Total Enterprise Value: $3.2 billion
Fiscal Year End: December 31
REIT Status: Fairwater REIT has elected to be treated as a real estate investment trust for federal income tax purposes pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, Fairwater is required to distribute at least 90% of its taxable income to its shareholders annually in the form of dividends, which requirement Fairwater has satisfied for each fiscal year since its initial REIT election.
Key Officers:
•  Jonathan R. Calder — Chief Executive Officer
•  Naomi T. Sinclair — Chief Financial Officer
•  David A. Whitfield — General Counsel and Secretary
•  Rachel S. Donahue — Senior Vice President, Capital Markets
Existing Portfolio: As of the date of this letter, Fairwater REIT's portfolio comprises sixty-two (62) multifamily residential communities containing approximately 18,400 apartment units located across the Mid-Atlantic and Southeast United States, including the fourteen properties comprising the Sun Belt Portfolio.
Consolidated Total Debt (Pre-Bridge): Prior to the incurrence of the Bridge Facility, Fairwater REIT's consolidated total indebtedness was approximately $1,480,000,000, consisting of a combination of secured mortgage loans, term loans, and unsecured revolving credit facilities.
Independent Auditors: Whitmore Hargrove & Co., P.C. (Christine M. Rowley, Lead Engagement Partner), 100 International Drive, Suite 1500, Baltimore, Maryland 21202
Fairwater Operating Partnership, L.P.
Entity Type: Delaware limited partnership
Employer Identification Number (EIN): 52-2847201
General Partner: Fairwater Real Estate Investment Trust (holding a 99.2% partnership interest)
Limited Partners: Various institutional and individual holders of operating partnership units (holding an aggregate 0.8% partnership interest)
Fairwater OP is the entity through which Fairwater REIT conducts substantially all of its real estate operations, including the acquisition, ownership, financing, management, and disposition of multifamily residential properties. Fairwater OP is the sole member of each of the fourteen SPE Borrowers.
SPE Co-Borrowers.  Each of the fourteen SPE Borrowers identified in Section 2 above is a Delaware limited liability company formed for the specific purpose of holding title to, and operating, its respective multifamily property. Each SPE is wholly owned by Fairwater OP as its sole member. Organizational documents for each SPE Borrower, including certificates of formation, current operating agreements, good standing certificates from the Delaware Secretary of State (dated within 30 days of this application), and foreign qualification certificates in the applicable property state (Texas, Georgia, Florida, North Carolina, or Tennessee, as applicable), are included among the enclosed materials.
As noted above, the operating agreements of the SPE Borrowers will be amended and restated prior to closing to incorporate the standard CMBS special-purpose entity covenants required by Clarendon Metropolitan, including restrictions on additional indebtedness, maintenance of separateness from affiliates, requirements for independent directors or springing members, and other customary bankruptcy-remoteness provisions.
6. List of Enclosures
The following materials are enclosed with this application for Clarendon Metropolitan's review. Each set of enclosed materials is organized and tabbed in the order set forth below:
A. Loan Application Form
1.  Completed Clarendon Metropolitan CMBS Loan Application form, executed by Naomi T. Sinclair, CFO, on behalf of Fairwater OP.
B. Rate Lock Deposit
2.  Wire transfer confirmation for the $2,400,000 rate lock deposit (reference number CL-CMBS-2025-09-0347).
3.  Fully executed Rate Lock Deposit Side Letter Agreement between Fairwater Operating Partnership, L.P. and Clarendon Metropolitan Insurance Company.
C. Organizational Documents for SPE Borrowers
4.  Certificates of Formation for each of Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC (14 certificates), as filed with the Delaware Secretary of State.
5.  Current Operating Agreements for each of the 14 SPE LLCs (to be amended and restated prior to closing to incorporate CMBS SPE covenants as required by the Lender).
6.  Certificates of Good Standing from the Delaware Secretary of State for each of the 14 SPE LLCs (each dated within 30 days of this application).
7.  Foreign qualification certificates for each SPE Borrower in its respective property state, as follows:
(a) Texas: Fairwater Sun Belt I LLC, Fairwater Sun Belt II LLC, Fairwater Sun Belt III LLC, Fairwater Sun Belt IV LLC, and Fairwater Sun Belt V LLC;
(b) Georgia: Fairwater Sun Belt VI LLC, Fairwater Sun Belt VII LLC, and Fairwater Sun Belt VIII LLC;
(c) Florida: Fairwater Sun Belt IX LLC, Fairwater Sun Belt X LLC, and Fairwater Sun Belt XI LLC;
(d) North Carolina: Fairwater Sun Belt XII LLC and Fairwater Sun Belt XIII LLC; and
(e) Tennessee: Fairwater Sun Belt XIV LLC.
D. Organizational Documents for Guarantor and Operating Partnership
8.  Declaration of Trust of Fairwater Real Estate Investment Trust, as amended, filed with the Maryland State Department of Assessments and Taxation.
9.  Bylaws of Fairwater Real Estate Investment Trust, as amended and restated.
10.  Certificate of Good Standing for Fairwater Real Estate Investment Trust issued by the Maryland State Department of Assessments and Taxation (SDAT Entity ID D19483726).
11.  Certificate of Limited Partnership for Fairwater Operating Partnership, L.P., as filed with the Delaware Secretary of State.
12.  Third Amended and Restated Agreement of Limited Partnership of Fairwater Operating Partnership, L.P.
13.  Certificate of Good Standing for Fairwater Operating Partnership, L.P. from the Delaware Secretary of State.
E. Board Authorization
14.  Certified copy of Resolutions of the Board of Trustees of Fairwater Real Estate Investment Trust, adopted at a duly convened meeting held on September 8, 2025, authorizing the execution and delivery of loan documents in connection with the permanent financing of the Sun Belt Portfolio.
F. Property Information Packages (for each of the 14 properties)
15.  Property summary and description (including location, site area, unit mix, amenities, and competitive positioning) for each of the 14 properties.
16.  Current rent rolls for each of the 14 properties (as of August 31, 2025).
17.  Trailing-twelve-month operating statements for each of the 14 properties (covering the period July 2024 through June 2025).
18.  Year-to-date operating statements for each of the 14 properties (covering the period January 2025 through August 2025).
19.  Capital expenditure history (covering the three most recent fiscal years) and projected capital expenditure budgets for each of the 14 properties.
20.  Market-area demographic reports and comparable property data for each submarket in which the properties are located.
G. Appraisals.  
21.  Note: Independent MAI appraisals are currently being prepared by Thornfield Appraisal Group LLC (3100 Cumberland Boulevard, Suite 600, Atlanta, Georgia 30339) for each of the 14 properties comprising the Sun Belt Portfolio. The appraisals are expected to be completed and delivered to Clarendon Metropolitan under separate cover in October 2025. Each appraisal will be addressed to Clarendon Metropolitan Insurance Company and its successors and assigns and will be prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and the requirements of the Lender's CMBS origination guidelines.
H. Financial Statements of Guarantor
22.  Audited consolidated financial statements of Fairwater Real Estate Investment Trust for the fiscal year ended December 31, 2024, together with the report of independent auditors (Whitmore Hargrove & Co., P.C.).
23.  Audited consolidated financial statements of Fairwater Real Estate Investment Trust for the fiscal year ended December 31, 2023, together with the report of independent auditors (Whitmore Hargrove & Co., P.C.).
24.  Audited consolidated financial statements of Fairwater Real Estate Investment Trust for the fiscal year ended December 31, 2022, together with the report of independent auditors (Whitmore Hargrove & Co., P.C.).
25.  Unaudited quarterly financial statements of Fairwater Real Estate Investment Trust for the fiscal quarter ended March 31, 2025 (Q1 2025).
26.  Unaudited quarterly financial statements of Fairwater Real Estate Investment Trust for the fiscal quarter ended June 30, 2025 (Q2 2025).
27.  Consolidated schedule of real estate assets and indebtedness of Fairwater Real Estate Investment Trust (as of June 30, 2025).
I. Title and Survey
28.  Pro forma title commitments issued by Marlowe Asset Management Title Insurance Group, Inc. (901 Main Street, Suite 1100, Dallas, Texas 75202) for each of the 14 properties. Note: Final lender's title insurance policies, including all CMBS endorsements required by the Lender, will be issued and delivered at closing.
29.  Existing ALTA/NSPS land title surveys for each of the 14 properties, obtained in connection with the acquisition on June 30, 2025. Note: Updated surveys are being ordered from the original surveying firms and will be delivered to the Lender and its counsel prior to closing.
J. Environmental Reports
30.  Phase I Environmental Site Assessment reports for each of the 14 properties, prepared in connection with Fairwater's acquisition of the Sun Belt Portfolio. Note: If the Lender requires updated Phase I reports or supplemental environmental assessments, Fairwater will promptly arrange for the preparation and delivery of such reports.
K. Insurance Information
31.  Current certificates of property and casualty insurance for the Sun Belt Portfolio, evidencing coverage in force for all 14 properties.
32.  Schedule of insurance coverage, including policy limits, deductibles, named insureds, and carrier information for all property, general liability, umbrella, flood, and earthquake (as applicable) policies.
L. Property Management
33.  Copies of the property management agreements between each SPE Borrower and Fairwater Residential Management LLC, each effective as of July 1, 2025.
M. Existing Indebtedness
34.  Summary of the existing $240,000,000 bridge credit facility dated June 30, 2025, with Kensington National Bank, N.A. as administrative agent, including the following information:
(a) Current outstanding principal: $240,000,000 (no amortization; interest-only structure);
(b) Interest rate: SOFR + 500 basis points (current all-in rate of 9.33%);
(c) Maturity date: December 31, 2025;
(d) Syndicate composition:
•  Kensington National Bank, N.A. (Administrative Agent) — $96,000,000 (40.00%)
•  Pinnacle Trust Company — $60,000,000 (25.00%)
•  Greystone Commerce Bank — $48,000,000 (20.00%)
•  Redfield Capital Markets, LLC — $36,000,000 (15.00%)
35.  Copy of the Bridge Credit Agreement dated June 30, 2025, among the SPE Borrowers, Fairwater Operating Partnership, L.P. as guarantor, Kensington National Bank, N.A. as administrative agent, and the lenders party thereto.
N. Legal Counsel Information
36.  Contact information for borrower's counsel:
Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022 Philip Hartmann, Responsible Partner Lisa Morrow, Lead Associate Matter No. 1036-00001
37.  Contact information for borrower's corporate/securities counsel:
Crestline & Alderman LLP One South Street, Suite 2800 Baltimore, Maryland 21202 Patricia S. Keene, Lead Partner
7. Contact Information and Requested Next Steps
For purposes of all communications relating to this application and the Proposed Loan, the primary contact persons for Fairwater are as follows:
Primary Business Contacts:
Naomi T. Sinclair Chief Financial Officer Fairwater Real Estate Investment Trust 8400 Chesapeake Center Drive, Suite 1200 Columbia, Maryland 21044
Rachel S. Donahue Senior Vice President, Capital Markets Fairwater Real Estate Investment Trust 8400 Chesapeake Center Drive, Suite 1200 Columbia, Maryland 21044
All communications should be directed to Ms. Sinclair, with a copy to Ms. Donahue.
Legal Counsel Contact:
Philip Hartmann Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022 Matter No. 1036-00001
Financial Advisor Contact:
Dennis P. Nakamura, Partner Beacon Ridge Capital Advisors LLC 300 Park Avenue, Suite 1800 New York, New York 10022
We respectfully request the following:
1.  Confirmation of Receipt. We request that Clarendon Metropolitan confirm receipt of this application, all accompanying enclosures, and the $2,400,000 rate lock deposit (reference number CL-CMBS-2025-09-0347).
2.  Issuance of Commitment Letter. We request that Clarendon Metropolitan proceed with its underwriting review and issue a commitment letter for the Proposed Loan as promptly as practicable, targeting a commitment date of October 1, 2025, consistent with the timeline discussed by the parties during the term sheet negotiation process.
3.  Target Closing Date. Fairwater desires to proceed expeditiously toward a closing of the Proposed Loan on or before November 28, 2025, which is approximately thirty-three (33) days in advance of the December 31, 2025 maturity date of the Bridge Facility. Meeting this closing deadline is of significant importance to Fairwater in order to ensure the orderly retirement of the bridge financing and to avoid any potential default or extension costs under the Bridge Facility.
4.  CMBS Securitization Diligence. We understand that the Proposed Loan is anticipated to be included in the CLRN 2025-C14 CMBS securitization vehicle (indicative designation, subject to final pooling and structuring determinations by Clarendon Metropolitan). We request that Clarendon Metropolitan and Ashworth McPhail LLP advise us, at their earliest convenience, of any additional diligence requirements, documentation deliverables, or representations and warranties that may be required in connection with the securitization process, so that we may begin to address those requirements promptly.
We invite Clarendon Metropolitan and its counsel at Ashworth McPhail LLP to contact Philip Hartmann at Calderwood & Harkness LLP with any questions, requests for additional information, or follow-up inquiries in connection with this application. We look forward to working with you and your team to bring this financing to a successful closing.
Very truly yours,
FAIRWATER OPERATING PARTNERSHIP, L.P.
By: Fairwater Real Estate Investment Trust,
its General Partner
By: ________
Name: Naomi T. Sinclair
Title: Chief Financial Officer
Date: September 15, 2025
cc:
Jonathan R. Calder, Chief Executive Officer, Fairwater Real Estate Investment Trust David A. Whitfield, General Counsel, Fairwater Real Estate Investment Trust Rachel S. Donahue, Senior Vice President, Capital Markets, Fairwater Real Estate Investment Trust Philip Hartmann, Calderwood & Harkness LLP Lisa Morrow, Calderwood & Harkness LLP Dennis P. Nakamura, Beacon Ridge Capital Advisors LLC Joanna C. Wexler, Ashworth McPhail LLP (Permanent Lender's Counsel)
Enclosures (as listed above)
SPE Borrower | Property Name | Location | Units | Year Built | Appraised Value
Fairwater Sun Belt I LLC | Ridgewater at Lakeline | Austin, TX | 320 | 2018 | $32,500,000
Fairwater Sun Belt II LLC | Sagebrush Commons | San Antonio, TX | 288 | 2016 | $24,800,000
Fairwater Sun Belt III LLC | Cypress Bend | Katy, TX | 340 | 2019 | $30,200,000
Fairwater Sun Belt IV LLC | Willowbrook Terrace | Sugar Land, TX | 310 | 2017 | $29,100,000
Fairwater Sun Belt V LLC | Heritage at Stonebriar | Frisco, TX | 342 | 2020 | $35,800,000
Fairwater Sun Belt VI LLC | Peachtree Crossings | Alpharetta, GA | 296 | 2015 | $28,600,000
Fairwater Sun Belt VII LLC | Cumberland Ridge | Smyrna, GA | 264 | 2014 | $24,200,000
Fairwater Sun Belt VIII LLC | Sugarloaf Station | Duluth, GA | 260 | 2016 | $23,400,000
Fairwater Sun Belt IX LLC | Bayshore Landings | Tampa, FL | 308 | 2017 | $33,800,000
Fairwater Sun Belt X LLC | Solara at Millenia | Orlando, FL | 292 | 2018 | $30,600,000
Fairwater Sun Belt XI LLC | Riverside Preserve | Jacksonville, FL | 260 | 2015 | $22,400,000
Fairwater Sun Belt XII LLC | Stonewall Flats | Charlotte, NC | 284 | 2019 | $28,200,000
Fairwater Sun Belt XIII LLC | Crabtree Pointe | Raleigh, NC | 256 | 2017 | $26,400,000
Fairwater Sun Belt XIV LLC | Harpeth Valley | Nashville, TN | 380 | 2021 | $15,000,000
Total | 4,200 | $385,000,000

CONFIDENTIAL

FAIRWATER OPERATING PARTNERSHIP, L.P.

Record

Parties

Dates

Amounts