ASSIGNMENT AND ASSUMPTION OF LEASES, CONTRACTS, AND INTANGIBLES
(Portfolio-Wide — 14 Properties)
June 6, 2024
Greystone Meridian Partners Fund III, L.P. (Assignor)
and
Fairwater Real Estate Investment Trust (Assignee)
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ASSIGNMENT AND ASSUMPTION OF LEASES, CONTRACTS, AND INTANGIBLES
This Assignment and Assumption of Leases, Contracts, and Intangibles (this "Assignment") is made and entered into as of June 6, 2024 (the "Effective Date" or the "Closing Date"), by and between:
ASSIGNOR:
Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership ("Assignor" or "Seller"), with its principal office located at 3300 Peachtree Road NE, Suite 2200, Atlanta, Georgia 30326, and its registered agent for service of process located at 1209 Orange Street, Wilmington, Delaware 19801 (Employer Identification Number: 83-1647205), acting by and through its general partner, Greystone Meridian Capital LLC, a Delaware limited liability company (Employer Identification Number: 83-1520984);
and
ASSIGNEE:
Fairwater Real Estate Investment Trust, a Maryland real estate investment trust ("Assignee" or "Buyer"), with its headquarters located at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044 (Employer Identification Number: 52-2198437; NYSE ticker symbol: FREIT).
This Assignment is delivered pursuant to and supplements that certain Purchase and Sale Agreement dated as of February 28, 2024, as amended by the First Amendment thereto dated as of April 12, 2024, and the Second Amendment thereto dated as of May 28, 2024 (as so amended, the "PSA"), by and between Assignor, as Seller, and Assignee, as Buyer, providing for the acquisition by Assignee of one hundred percent (100%) of the membership interests in each of the fourteen (14) single-purpose Delaware limited liability companies identified on Exhibit A attached hereto and incorporated herein by this reference (each, a "Target Entity" and collectively, the "Target Entities"), which Target Entities collectively own that certain fourteen (14)-property Sun Belt logistics and office portfolio more particularly described herein (the "Portfolio").
The parties acknowledge and agree that the transaction contemplated by the PSA is structured as an entity-level acquisition, whereby Assignor has transferred or caused to be transferred to Assignee one hundred percent (100%) of the membership interests in each of the fourteen (14) Target Entities pursuant to fourteen (14) separate Assignments and Assumptions of Membership Interests executed concurrently herewith (collectively, the "Membership Interest Assignments"). This Assignment is executed and delivered on a supplemental, "belt-and-suspenders" basis for the purpose of ensuring the complete, direct, and express assignment and transfer of all leases, service contracts, and intangible property rights associated with the Portfolio from Assignor and the Target Entities to Assignee, notwithstanding that such items are already owned by the Target Entities whose membership interests have been assigned to Assignee pursuant to the Membership Interest Assignments. This supplemental assignment is intended to satisfy any third-party requirements, including requirements imposed by existing lenders, title insurance companies, tenant notification protocols, and governmental authorities.
The aggregate purchase price for the Portfolio is One Billion One Hundred Million Dollars ($1,100,000,000) (the "Purchase Price"), subject to a property condition assessment repair credit of One Million Seventy Thousand Dollars ($1,070,000) (the "PCA Repair Credit"), resulting in an adjusted purchase price of One Billion Ninety-Eight Million Nine Hundred Thirty Thousand Dollars ($1,098,930,000) (the "Adjusted Purchase Price"). The Adjusted Purchase Price is comprised of (i) Six Hundred Twelve Million Dollars ($612,000,000) of assumed mortgage debt and (ii) Four Hundred Eighty-Eight Million Dollars ($488,000,000) in cash equity, adjusted to Four Hundred Eighty-Six Million Nine Hundred Thirty Thousand Dollars ($486,930,000) net cash to Seller after the PCA Repair Credit, subject to prorations and adjustments as set forth in the PSA and the Preliminary Closing Proration Statement executed concurrently herewith.
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the PSA.
RECITALS
WHEREAS:
A. The Portfolio. Assignor, through the Target Entities, owns and operates a portfolio of fourteen (14) properties consisting of ten (10) logistics properties and four (4) office properties located across five (5) states — Georgia, Texas, Florida, Tennessee, and North Carolina — comprising approximately five million two hundred twenty-four thousand (5,224,000) rentable square feet (each, a "Property" and collectively, the "Properties"). The Properties, together with the corresponding Target Entities, are as follows:
1. Fairfield Logistics Center I — 4200 Fairfield Industrial Blvd, Fairburn, GA 30213 (owned by GMP Fairfield I LLC, Employer Identification Number: 84-2310561);
2. Fairfield Logistics Center II — 4300 Fairfield Industrial Blvd, Fairburn, GA 30213 (owned by GMP Fairfield II LLC, Employer Identification Number: 84-2310578);
3. Westlake Distribution Hub — 11500 Westlake Parkway, Houston, TX 77082 (owned by GMP Westlake LLC, Employer Identification Number: 84-2415693);
4. Katy Freeway Logistics Park — 22600 Katy Freeway, Katy, TX 77449 (owned by GMP Katy LLC, Employer Identification Number: 84-2415710);
5. Alliance Commerce Center — 2800 Alliance Gateway Blvd, Fort Worth, TX 76177 (owned by GMP Alliance LLC, Employer Identification Number: 84-2415728);
6. Lakeland Crossings Industrial — 7100 Drane Field Road, Lakeland, FL 33811 (owned by GMP Lakeland LLC, Employer Identification Number: 84-2527834);
7. Southport Logistics Park — 3200 Southport Connector Road, Jacksonville, FL 32218 (owned by GMP Southport LLC, Employer Identification Number: 84-2527849);
8. Murfreesboro Distribution Center — 1600 Joe B. Jackson Parkway, Murfreesboro, TN 37127 (owned by GMP Murfreesboro LLC, Employer Identification Number: 84-2527856);
9. Buckhead Place Office Tower — 3380 Peachtree Road NE, Atlanta, GA 30326 (owned by GMP Buckhead LLC, Employer Identification Number: 84-2639901);
10. SouthPark Corporate Center — 6200 Fairview Road, Charlotte, NC 28210 (owned by GMP SouthPark LLC, Employer Identification Number: 84-2639918);
11. Cool Springs Office Park — 5000 Virginia Way, Brentwood, TN 37027 (owned by GMP Cool Springs LLC, Employer Identification Number: 84-2639925);
12. Brickell Bay Office Building — 1450 Brickell Avenue, Miami, FL 33131 (owned by GMP Brickell LLC, Employer Identification Number: 84-2639932);
13. Peachtree Corners Logistics Center — 5900 Peachtree Industrial Blvd, Peachtree Corners, GA 30071 (owned by GMP Peachtree LLC, Employer Identification Number: 84-2741063); and
14. Mount Juliet Commerce Park — 400 South Mount Juliet Road, Mount Juliet, TN 37122 (owned by GMP Mount Juliet LLC, Employer Identification Number: 84-2741070).
B. The PSA and Entity-Level Transfer. Assignor and Assignee entered into the PSA dated as of February 28, 2024, as amended by the First Amendment thereto dated as of April 12, 2024, and the Second Amendment thereto dated as of May 28, 2024, pursuant to which Assignor agreed to sell, and Assignee agreed to purchase, one hundred percent (100%) of the membership interests in each of the fourteen (14) Target Entities. Concurrently herewith, Assignor has executed and delivered fourteen (14) separate Assignments and Assumptions of Membership Interests, each transferring one hundred percent (100%) of the membership interests in one Target Entity from Assignor to Assignee. This Assignment is supplemental to such entity-level transfer and is intended to provide an express, direct assignment of the Assigned Interests (as defined below) for the avoidance of doubt and to satisfy any third-party requirements, including lender consent and compliance requirements, title company requirements, tenant notification requirements, and any requirements imposed by governmental authorities in the jurisdictions in which the Properties are located.
C. Leases. The Target Entities are the landlord under eighty-seven (87) leases covering approximately five million two hundred twenty-four thousand (5,224,000) rentable square feet across the Portfolio, as more particularly described in Exhibit B attached hereto and incorporated herein by this reference (each, a "Lease" and collectively, the "Leases"). As of December 31, 2023, the Leases generated aggregate annual in-place base rent of Seventy-Four Million Eight Hundred Thousand Dollars ($74,800,000), and the Properties were approximately 93.2% occupied on a weighted-average basis. The rent roll attached as Exhibit H to the PSA sets forth the complete details of each Lease as of such date. Security deposits in the aggregate amount of Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000) (the "Security Deposits") are held in deposit accounts maintained by the respective Target Entities at Magnolia Commerce Bank, N.A. (225 Peachtree Street NE, Suite 100, Atlanta, Georgia 30303), and such Security Deposits are transferred as part of the entity-level transfer accomplished through the Membership Interest Assignments.
D. Service Contracts. The Target Entities are party to sixty-three (63) service contracts, maintenance agreements, and vendor contracts relating to the operation and maintenance of the Portfolio, as more particularly described in Exhibit C attached hereto and incorporated herein by this reference (each, a "Service Contract" and collectively, the "Service Contracts"). The Service Contracts cover, among other things, landscaping and grounds maintenance, janitorial and custodial services, security and access control, elevator maintenance and inspection, HVAC preventive maintenance and repair, fire alarm monitoring and life safety systems, pest control, and other property-level services customary for properties of the type and class comprising the Portfolio. The list of Service Contracts attached as Exhibit I to the PSA sets forth the complete details of each Service Contract.
E. Intangible Property. The Target Entities hold various warranties, guaranties, permits, licenses, entitlements, certificates of occupancy, plans, specifications, architectural and engineering drawings, environmental reports, property condition assessment reports, appraisals, surveys, trade names, domain names, utility contracts, and other intangible property rights and appurtenances relating to the Properties (collectively, the "Intangible Property"), as more particularly described in Exhibit D attached hereto and incorporated herein by this reference.
F. Desire to Assign. Assignor desires to assign, transfer, set over, and convey to Assignee, and Assignee desires to accept and assume, all of Assignor's and the Target Entities' right, title, and interest in and to the Leases, Service Contracts, and Intangible Property (collectively, the "Assigned Interests"), effective as of the Closing Date, on the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein, the payment of the Purchase Price, the consummation of the transactions contemplated by the PSA, and other good and valuable consideration, the receipt, sufficiency, and adequacy of which are hereby acknowledged by each party, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used in this Assignment, the following capitalized terms shall have the meanings set forth below:
"Assigned Interests" means, collectively, the Leases, the Service Contracts, and the Intangible Property.
"Closing Date" means June 6, 2024.
"Intangible Property" means all warranties, guaranties (including, without limitation, contractor warranties, subcontractor warranties, and manufacturer warranties), permits, licenses, entitlements, approvals, certificates of occupancy, zoning letters and zoning confirmation letters, development rights, impact fee credits, utility commitments, plans and specifications, architectural and engineering drawings, as-built drawings, construction documents, environmental reports and assessments (including Phase I Environmental Site Assessments and, to the extent applicable, Phase II Environmental Site Assessments), property condition assessment reports, appraisals, trade names and trademarks associated with the Properties (to the extent owned by the Target Entities and assignable), telephone and fax numbers, email addresses, website addresses and domain names, and all other intangible rights, privileges, and appurtenances owned by or in the name of any Target Entity and relating to or used in connection with the ownership, use, operation, or maintenance of the Properties.
"Leases" has the meaning set forth in Recital C of this Assignment; the eighty-seven (87) leases listed on Exhibit B attached hereto.
"Permitted Exceptions" means those title exceptions set forth in Exhibit P to the PSA.
"Properties" means the fourteen (14) properties described in Recital A of this Assignment.
"PSA" means the Purchase and Sale Agreement dated as of February 28, 2024, by and between Assignor and Assignee, as amended by the First Amendment thereto dated as of April 12, 2024, and the Second Amendment thereto dated as of May 28, 2024.
"Security Deposits" means the tenant security deposits held in Target Entity deposit accounts at Magnolia Commerce Bank, N.A. (225 Peachtree Street NE, Suite 100, Atlanta, Georgia 30303) in the aggregate amount of Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000), as set forth in further detail on Exhibit B attached hereto.
"Service Contracts" has the meaning set forth in Recital D of this Assignment; the sixty-three (63) service contracts listed on Exhibit C attached hereto.
"Target Entities" means the fourteen (14) single-purpose Delaware limited liability companies listed on Exhibit A attached hereto, each of which owns one of the Properties.
Section 1.2 PSA Definitions Incorporated. Capitalized terms used but not otherwise defined in this Assignment shall have the meanings assigned to such terms in the PSA. In the event of any conflict between a definition set forth in this Assignment and a definition set forth in the PSA, the definition set forth in the PSA shall control.
ARTICLE II
ASSIGNMENT
Section 2.1 Assignment of Leases. Assignor hereby assigns, transfers, sets over, and conveys to Assignee all of Assignor's and each Target Entity's right, title, and interest as landlord in, to, and under each of the eighty-seven (87) Leases described in Exhibit B attached hereto, together with all of the following:
(a) All rents, additional rents, percentage rents, expense reimbursements, common area maintenance charges, tax reimbursements, insurance reimbursements, utility reimbursements, late charges, interest, and any and all other amounts payable by tenants under the Leases that accrue from and after the Closing Date, subject in all respects to the prorations set forth in the PSA and the Preliminary Closing Proration Statement executed concurrently herewith;
(b) All prepaid rents received by Assignor or any Target Entity prior to the Closing Date that are attributable to rental periods occurring from and after the Closing Date, which prepaid rents have been credited to Assignee on the Preliminary Closing Proration Statement;
(c) All Security Deposits in the aggregate amount of Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000) held in deposit accounts maintained by the respective Target Entities at Magnolia Commerce Bank, N.A. (225 Peachtree Street NE, Suite 100, Atlanta, Georgia 30303), together with any interest accrued thereon to the extent required to be held for the benefit of tenants under applicable law or the terms of the applicable Leases;
(d) All claims, causes of action, demands, and rights of recovery against any tenant for defaults, breaches, or violations under the Leases arising from and after the Closing Date, including the right to pursue eviction, dispossession, or other remedies available to the landlord under the Leases or applicable law;
(e) All tenant estoppel certificates delivered by tenants in connection with the transactions contemplated by the PSA, of which seventy-nine (79) executed estoppel certificates have been received as of the Closing Date, covering approximately 91.4% of in-place annual base rent (that is, Sixty-Eight Million Three Hundred Seventy-One Thousand Two Hundred Dollars ($68,371,200) of Seventy-Four Million Eight Hundred Thousand Dollars ($74,800,000)), which exceeds the PSA-required threshold of eighty percent (80%) of in-place annual base rent (that is, Fifty-Nine Million Eight Hundred Forty Thousand Dollars ($59,840,000)); and
(f) All Subordination, Non-Disturbance and Attornment Agreements ("SNDAs") executed by tenants in connection with the transactions contemplated by the PSA; as of the Closing Date, thirty-four (34) of the thirty-eight (38) required Major Tenant SNDAs have been fully executed and delivered, and the remaining four (4) Major Tenant SNDAs are to be delivered within thirty (30) days following the Closing Date in accordance with the terms and conditions of the SNDA Post-Closing Carve-Out Side Letter executed concurrently herewith.
The foregoing assignment of the Leases includes, without limitation, all amendments, modifications, supplements, extensions, renewals, and guaranties of or relating to the Leases, and all rights and benefits of the landlord thereunder, including the right to exercise any options to recapture, terminate, or modify any Lease in accordance with its terms.
Section 2.2 Assignment of Service Contracts. Assignor hereby assigns, transfers, sets over, and conveys to Assignee all of Assignor's and each Target Entity's right, title, and interest in, to, and under each of the sixty-three (63) Service Contracts described in Exhibit C attached hereto, together with all rights, privileges, benefits, and entitlements thereunder that accrue from and after the Closing Date. The foregoing assignment includes all amendments, modifications, supplements, renewals, and extensions of the Service Contracts, and all rights of the contracting party thereunder, including the right to terminate any Service Contract in accordance with its terms. Assignee acknowledges that certain Service Contracts may be terminated by Assignee post-closing in accordance with the termination provisions contained therein, and that Assignee has reviewed the Service Contract Review Memorandum prepared by Fairwater Property Management LLC and Argyle Property Services LLC, which sets forth recommendations regarding the retention, renegotiation, or termination of each Service Contract.
Section 2.3 Assignment of Intangible Property. Assignor hereby assigns, transfers, sets over, and conveys to Assignee all of Assignor's and each Target Entity's right, title, and interest in, to, and under all Intangible Property, including, without limitation, each of the following:
(a) All warranties and guaranties, whether express or implied, from contractors, subcontractors, materialmen, suppliers, and manufacturers relating to the construction, renovation, improvement, or repair of the Properties or any improvements, fixtures, building systems, or equipment located thereon, including, without limitation, roof warranties, structural warranties, envelope warranties, and equipment warranties, to the extent assignable;
(b) All permits, licenses, approvals, entitlements, variances, special exceptions, conditional use permits, and certificates of occupancy issued by any federal, state, county, municipal, or other governmental authority in connection with the construction, renovation, use, occupancy, or operation of the Properties, to the extent assignable by their terms or by operation of law;
(c) All zoning confirmation letters obtained from the applicable zoning authorities, of which fourteen (14) of fourteen (14) have been obtained, confirming the zoning compliance of each Property;
(d) All plans, specifications, architectural drawings, engineering drawings, as-built drawings, shop drawings, construction documents, and design development documents relating to the Properties or any improvements thereon;
(e) All Phase I Environmental Site Assessments for the fourteen (14) Properties, each prepared by Trident Environmental Group LLC in accordance with the ASTM E1527-21 Standard Practice for Environmental Site Assessments, including any Phase II Environmental Site Assessments (of which none were required);
(f) All property condition assessment reports for the fourteen (14) Properties, each prepared by Rampart Building Sciences, Inc., including all immediate needs assessments, short-term capital expenditure projections, and long-term replacement reserve analyses;
(g) All appraisals of the Properties prepared by Stonebridge Valuation Advisors, LLC in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP);
(h) All ALTA/NSPS Land Title Surveys of the Properties prepared by Meridian Land Surveying, Inc. in accordance with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys, as adopted by the American Land Title Association and the National Society of Professional Surveyors;
(i) All trade names, trademarks, service marks, logos, and similar intellectual property associated with the Properties, to the extent owned by the Target Entities and assignable, including, without limitation, the names "Fairfield Logistics Center," "Westlake Distribution Hub," "Katy Freeway Logistics Park," "Alliance Commerce Center," "Lakeland Crossings Industrial," "Southport Logistics Park," "Murfreesboro Distribution Center," "Buckhead Place," "SouthPark Corporate Center," "Cool Springs Office Park," "Brickell Bay," "Peachtree Corners Logistics Center," and "Mount Juliet Commerce Park";
(j) All telephone numbers, facsimile numbers, email addresses, website addresses, internet domain names, and social media accounts associated with the Properties and maintained by or on behalf of the Target Entities;
(k) All utility deposits, utility contracts, utility commitments, and any refundable deposits or credits held by any utility provider with respect to the Properties; and
(l) All books, records, files, correspondence, tenant files, lease files, vendor files, accounting records, and other documentation maintained by the Target Entities or by Argyle Property Services LLC (3300 Peachtree Road NE, Suite 2200, Atlanta, Georgia 30326), as the current property manager of the Portfolio, relating to the ownership, operation, management, or maintenance of the Properties.
Section 2.4 Supplemental Nature of Assignment. The parties acknowledge and agree that this Assignment is supplemental to, and not in lieu of, the entity-level transfer accomplished through the fourteen (14) Membership Interest Assignments executed concurrently herewith. The entity-level transfer constitutes the primary mechanism by which Assignee has acquired the Assigned Interests, and this Assignment is executed and delivered for the avoidance of doubt and to provide express record evidence of the assignment and assumption of the Leases, Service Contracts, and Intangible Property.
In the event of any conflict or inconsistency between the terms of this Assignment and the terms of the PSA or the Membership Interest Assignments, the terms of the PSA shall control and govern in all respects. This Assignment is not intended to, and shall not, create any independent representations, warranties, covenants, or indemnification obligations beyond those expressly set forth in the PSA. The parties' respective rights and obligations with respect to the Assigned Interests are governed by and subject to the terms and conditions of the PSA, and this Assignment shall be interpreted and construed in a manner consistent therewith.
ARTICLE III
ASSUMPTION
Section 3.1 Assumption of Lease Obligations. Assignee hereby accepts the foregoing assignment of the Leases set forth in Section 2.1 and assumes and agrees to perform, observe, fulfill, and be bound by all of the obligations, duties, covenants, and liabilities of the landlord under each of the eighty-seven (87) Leases arising from and after the Closing Date, in accordance with the terms and conditions of each such Lease. Without limiting the generality of the foregoing, Assignee specifically assumes full responsibility for the Security Deposits in the aggregate amount of Four Million Two Hundred Eighty-Three Thousand Dollars ($4,283,000) and acknowledges that such Security Deposits are currently held in deposit accounts maintained by the respective Target Entities at Magnolia Commerce Bank, N.A. (225 Peachtree Street NE, Suite 100, Atlanta, Georgia 30303). Assignee shall cause such Security Deposits to be transferred to the property management operating accounts maintained by Fairwater Property Management LLC (7200 Chesapeake Parkway, Suite 1150, Columbia, Maryland 21044) as part of the post-closing property management transition contemplated by the Transition Services Agreement described in Article VI hereof. Assignee acknowledges and agrees that it shall hold, apply, and return all Security Deposits in accordance with the terms of the applicable Leases and in compliance with all applicable laws and regulations governing the handling of tenant security deposits in each jurisdiction in which the Properties are located.
Section 3.2 Assumption of Service Contract Obligations. Assignee hereby accepts the foregoing assignment of the Service Contracts set forth in Section 2.2 and assumes and agrees to perform, observe, fulfill, and be bound by all of the obligations, duties, covenants, and liabilities of the applicable Target Entity under each of the sixty-three (63) Service Contracts arising from and after the Closing Date, in accordance with the terms and conditions of each such Service Contract.
Section 3.3 Assumption of Intangible Property Obligations. Assignee hereby accepts the foregoing assignment of the Intangible Property set forth in Section 2.3 and assumes any and all obligations, duties, and liabilities associated with the Intangible Property arising from and after the Closing Date, to the extent applicable and to the extent such obligations run with or are appurtenant to the Intangible Property.
Section 3.4 Limitation on Assumed Obligations. Notwithstanding anything to the contrary contained in this Assignment, Assignee does not assume and shall not be responsible for any obligations, liabilities, claims, demands, losses, costs, expenses, or defaults arising under or relating to the Leases, Service Contracts, or Intangible Property that are attributable to or arise from events, acts, omissions, or circumstances occurring during the period prior to the Closing Date (collectively, "Pre-Closing Obligations"), all of which Pre-Closing Obligations are retained by Assignor as set forth in the PSA. For the avoidance of doubt, Assignor's retained liabilities with respect to Pre-Closing Obligations are subject to the indemnification provisions, liability limitations, monetary caps, deductible baskets, and survival periods set forth in the PSA, including, without limitation, the following:
(a) General Representation Cap: Fifty-Five Million Dollars ($55,000,000), representing five percent (5%) of the Purchase Price;
(b) Fundamental Representation Cap: One Hundred Ten Million Dollars ($110,000,000), representing ten percent (10%) of the Purchase Price;
(c) Basket (Tipping): Five Million Five Hundred Thousand Dollars ($5,500,000), representing one-half of one percent (0.5%) of the Purchase Price, with a tipping basket mechanism such that once the aggregate amount of indemnifiable losses exceeds the Basket amount, Assignor shall be liable for the full amount of such losses from the first dollar (subject to the applicable Cap);
(d) De Minimis Threshold: Two Hundred Seventy-Five Thousand Dollars ($275,000) per individual claim; individual claims below the De Minimis Threshold shall not count toward or be aggregated for purposes of exceeding the Basket;
(e) General Representation Survival Period: Eighteen (18) months from the Closing Date, expiring on December 6, 2025;
(f) Tax Representation Survival Period: Thirty-six (36) months from the Closing Date, expiring on June 6, 2027; and
(g) Indemnity Escrow: Sixteen Million Five Hundred Thousand Dollars ($16,500,000), representing one and one-half percent (1.5%) of the Purchase Price, held in escrow by Commonwealth National Title Insurance Company in accordance with the terms of the Indemnity Escrow Agreement executed concurrently herewith.
ARTICLE IV
PRORATIONS AND ADJUSTMENTS
Section 4.1 Prorations. The income, expenses, and other items attributable to the ownership and operation of the Properties have been prorated between Assignor and Assignee as of 11:59 p.m. Eastern Time on the day immediately preceding the Closing Date, in accordance with the proration and working-capital methodology set forth in Exhibit U to the PSA and as reflected in the Preliminary Closing Proration Statement executed concurrently herewith. Such prorations include, without limitation, the following:
(a) Real Property Taxes. Estimated 2024 annual real property taxes for the Portfolio in the aggregate amount of Fourteen Million Seven Hundred Sixty Thousand Dollars ($14,760,000). Assignor's prorated share of such real property taxes for the period from January 1, 2024, through and including June 5, 2024 (157 days of a 366-day leap year), is Six Million Three Hundred Thirty-Two Thousand Nine Hundred Fifty-One Dollars ($6,332,951), which amount has been credited to Assignee on the Preliminary Closing Proration Statement;
(b) CAM/OpEx Reconciliation Reserve. An estimated holdback of One Million Eight Hundred Fifty Thousand Dollars ($1,850,000) pending completion of the annual tenant common area maintenance and operating expense reconciliation for calendar year 2023, which reconciliation is to be completed by the applicable Target Entities (under the direction of Assignee) in accordance with the terms of the applicable Leases;
(c) Insurance Premiums. Prorated amounts for property insurance, general liability insurance, and other insurance coverage maintained with respect to the Properties, to the extent such insurance policies are assumed by Assignee or the Target Entities following the Closing Date;
(d) Utility Charges. Prorated amounts for electricity, gas, water, sewer, telecommunications, and other utility services provided to the Properties, based on final meter readings obtained as close to the Closing Date as practicable;
(e) Percentage Rent. Prorated amounts of percentage rent, if any, payable under the Leases, based on tenant sales breakpoints and actual sales volumes for the applicable measurement periods; and
(f) Other Income and Expenses. All other items of income and expense attributable to the ownership and operation of the Properties, including, without limitation, management fees, leasing commissions payable with respect to new or renewal leases, and tenant improvement allowances.
All rents and other income received by Assignor or any Target Entity prior to the Closing Date that are attributable to rental periods occurring from and after the Closing Date have been credited to Assignee on the Preliminary Closing Proration Statement. All rents and other income received by Assignee or any Target Entity after the Closing Date that are attributable to rental periods occurring prior to the Closing Date shall be remitted by Assignee to Assignor within fifteen (15) business days following receipt thereof, subject to the application priority set forth in Section 7.2 hereof.
Section 4.2 Post-Closing True-Up. Assignor and Assignee shall cooperate in good faith to prepare and agree upon a final proration statement (the "Final Proration Statement") within ninety (90) days following the Closing Date (that is, by September 4, 2024), in accordance with the procedures and methodology set forth in Exhibit V to the PSA. Any net adjustment reflected on the Final Proration Statement in favor of either party shall be paid by the owing party to the other party within ten (10) business days following the mutual agreement of the parties on the Final Proration Statement, by wire transfer of immediately available funds to an account designated by the receiving party. As of the date hereof, the parties acknowledge that the final post-closing true-up amount was agreed upon on August 28, 2024, reflecting a net credit of Three Hundred Forty-Seven Thousand Two Hundred Eighteen Dollars ($347,218) in favor of Assignee, which amount was paid by Assignor to Assignee by wire transfer on September 5, 2024.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Assignor's Representations. Assignor represents and warrants to Assignee, as of the Closing Date, as follows:
(a) Authority. Assignor has the right, power, legal capacity, and authority to execute, deliver, and perform this Assignment and to assign, transfer, and convey the Assigned Interests to Assignee as contemplated herein. The execution, delivery, and performance of this Assignment by Assignor have been duly authorized by all necessary action on the part of Assignor, acting by and through Greystone Meridian Capital LLC, a Delaware limited liability company, as its sole general partner, which is authorized to act on behalf of Assignor by its authorized signatories, Victor Lansdell and Elise Rathborne, Co-Founders and Managing Partners. No further consent, approval, or authorization of any partner, member, manager, governmental authority, or other person or entity is required in connection with the execution, delivery, or performance of this Assignment by Assignor, except as has been previously obtained.
(b) Complete List of Leases. The Leases listed on Exhibit B attached hereto constitute all of the leases, subleases, licenses, occupancy agreements, and other agreements granting possessory rights in or to any portion of the Properties that are in effect as of the Closing Date. There are no oral leases, side agreements, or other arrangements granting any person the right to occupy or use any portion of the Properties that are not reflected on Exhibit B.
(c) Complete List of Service Contracts. The Service Contracts listed on Exhibit C attached hereto constitute all of the service contracts, maintenance agreements, management agreements (other than the Transition Services Agreement executed concurrently herewith), vendor contracts, and other agreements relating to the operation, management, or maintenance of the Properties that are in effect as of the Closing Date. There are no oral service contracts or other arrangements for the provision of services to the Properties that are not reflected on Exhibit C.
(d) No Prior Assignment. Assignor has not assigned, pledged, hypothecated, encumbered, or otherwise transferred any of the Assigned Interests to any person or entity other than Assignee, except as expressly permitted by the PSA and subject to the liens and security interests of the existing mortgage lenders as set forth in the assumed loan documents.
(e) Limitation of Representations. The representations and warranties set forth in this Section 5.1 are subject to and limited by the representations, warranties, qualifications, limitations, and indemnification provisions of the PSA. No additional representations or warranties, whether express or implied, are intended to be made by Assignor pursuant to this Assignment beyond those expressly set forth in the PSA, and Assignee acknowledges that it is not relying on any representation or warranty of Assignor not expressly set forth in the PSA.
Section 5.2 Assignee's Representations. Assignee represents and warrants to Assignor, as of the Closing Date, as follows:
(a) Authority. Assignee has the right, power, legal capacity, and authority to execute, deliver, and perform this Assignment and to accept the assignment of and assume the Assigned Interests as contemplated herein. The execution, delivery, and performance of this Assignment by Assignee have been duly authorized by all necessary action on the part of Assignee, including the approval of the Board of Trustees of Fairwater Real Estate Investment Trust. Marcus Devereaux, Executive Vice President, Acquisitions, is an authorized signatory of Assignee with full power and authority to execute and deliver this Assignment on behalf of Assignee.
(b) Due Diligence Review. Assignee has reviewed the Leases, Service Contracts, and Intangible Property in the course of its due diligence investigation of the Portfolio, and Assignee accepts the Assigned Interests in their current condition, subject in all respects to the terms and conditions of the PSA, including the representations, warranties, and indemnification provisions set forth therein. Assignee has conducted such investigations, inspections, and reviews of the Properties, the Target Entities, the Leases, the Service Contracts, and the Intangible Property as Assignee has deemed necessary or appropriate, and Assignee is satisfied with the results thereof.
ARTICLE VI
PROPERTY MANAGEMENT TRANSITION
Section 6.1 Transition from Argyle to Fairwater PM. The parties acknowledge that, concurrently with the execution and delivery of this Assignment, Argyle Property Services LLC (3300 Peachtree Road NE, Suite 2200, Atlanta, Georgia 30326; portfolio manager: Sean Kilpatrick) and Fairwater Property Management LLC (7200 Chesapeake Parkway, Suite 1150, Columbia, Maryland 21044; SVP, Operations: Leah Torrance) have entered into that certain Transition Services Agreement (the "TSA"), pursuant to which Argyle Property Services LLC has agreed to provide transitional property management services with respect to the Portfolio for a period of ninety (90) days following the Closing Date (the "Transition Period"), in exchange for a monthly fee of Three Hundred Seventy-Five Thousand Dollars ($375,000) per month, for an aggregate transition fee of One Million One Hundred Twenty-Five Thousand Dollars ($1,125,000).
The scope of services to be provided during the Transition Period includes, without limitation: (i) ongoing property management functions, including tenant relations, rent collection, maintenance coordination, and vendor management; (ii) transition of all accounting systems, records, and financial reporting platforms to Assignee's designated systems; (iii) novation or assignment of vendor contracts and Service Contracts to the extent required; (iv) transfer of all operating accounts maintained at Magnolia Commerce Bank, N.A. (contact: Linda Prescott, Vice President, Commercial Banking) to accounts designated by Fairwater Property Management LLC; and (v) coordination of tenant communications regarding the change of ownership and property management.
Section 6.2 Tenant Notification. In connection with the consummation of the transactions contemplated by the PSA and this Assignment, tenant notification letters were prepared and distributed to all eighty-seven (87) tenants under the Leases, advising each tenant of the change of ownership of the applicable Property to Fairwater Real Estate Investment Trust and the transition of property management responsibilities to Fairwater Property Management LLC. Such notification letters include updated rent payment instructions, new property management contact information, and confirmation of the status of each tenant's Security Deposit. All tenant notification letters were sent by first-class mail and electronic mail on June 7, 2024 (the first business day following the Closing Date), in compliance with the notice requirements of each applicable Lease and in accordance with the requirements of applicable landlord-tenant laws in each jurisdiction in which the Properties are located.
ARTICLE VII
COVENANTS
Section 7.1 Further Assurances. Each party hereto covenants and agrees that, from and after the Closing Date, it shall execute and deliver such additional documents, instruments, certificates, and agreements, and shall take such further actions, as may be reasonably requested by the other party and as may be reasonably necessary or desirable to effectuate the purposes and intent of this Assignment, including, without limitation, any separate assignment instruments, consent forms, or novation agreements required by any tenant, governmental authority, utility provider, or other third party in connection with the transfer of any of the Assigned Interests. The obligations of each party under this Section 7.1 shall survive the Closing Date for a period of twelve (12) months.
Section 7.2 Cooperation on Rent Collections. Assignor shall cooperate with Assignee in good faith in collecting any rents, additional rents, reimbursements, or other amounts due and payable by tenants under the Leases for rental periods or otherwise attributable to the period prior to the Closing Date; provided, however, that Assignee shall first apply any post-closing rent collections received from tenants to current amounts owed by such tenants for the rental period in which such payment is received, and thereafter to any past-due amounts owed for rental periods from and after the Closing Date, and only then to pre-closing arrearages attributable to rental periods prior to the Closing Date. Any pre-closing arrearages collected by Assignee shall be remitted to Assignor within fifteen (15) business days following Assignee's receipt thereof. Assignor shall not have the right to commence any legal proceedings against any tenant for the collection of pre-closing arrearages without the prior written consent of Assignee, which consent shall not be unreasonably withheld, conditioned, or delayed, and Assignor shall not take any action that would impair Assignee's relationship with any tenant or interfere with Assignee's ongoing operation of the Properties.
Section 7.3 Lender Compliance. The parties acknowledge and agree that the Properties are encumbered by mortgage debt that has been assumed by Assignee in connection with the transactions contemplated by the PSA in the aggregate principal amount of Six Hundred Twelve Million Dollars ($612,000,000), as follows:
(a) Pinnacle Federal Bank, N.A.: Aggregate outstanding principal balance of Four Hundred Twenty-One Million Six Hundred Thousand Dollars ($421,600,000), secured by eight (8) logistics properties (Loans 1-A through 1-H), pursuant to that certain Master Loan Agreement dated as of September 15, 2020, bearing interest at a fixed rate of 4.22% per annum, with a maturity date of July 1, 2028. The written consent of Pinnacle Federal Bank, N.A. to the change of control and entity-level transfer was received on June 4, 2024.
(b) Veltrano Capital Lending Corp.: Aggregate outstanding principal balance of One Hundred Forty-Two Million Three Hundred Thousand Dollars ($142,300,000), secured by four (4) office properties (Loans 2-A through 2-D), pursuant to that certain Loan Agreement dated as of February 1, 2021, bearing interest at a fixed rate of 4.68% per annum, with a maturity date of March 1, 2029. The written consent of Veltrano Capital Lending Corp. to the change of control and entity-level transfer was received on May 17, 2024.
(c) Sycamore Life Insurance Company: Aggregate outstanding principal balance of Forty-Eight Million One Hundred Thousand Dollars ($48,100,000), secured by two (2) logistics properties (Loans 3-A and 3-B), pursuant to that certain Note Purchase Agreement dated as of November 22, 2019, bearing interest at a fixed rate of 3.95% per annum, with a maturity date of December 1, 2030. The written consent of Sycamore Life Insurance Company to the change of control and entity-level transfer was received on May 22, 2024.
All lender consents required in connection with the change of control and entity-level transfer have been obtained from each of the three (3) lenders identified above, and separate Assumption Agreements and Replacement Guaranties have been executed by or on behalf of Assignee concurrently herewith and delivered to the applicable lenders. This Assignment is subject in all respects to the terms and conditions of the assumed loan documents, and nothing contained in this Assignment shall be deemed to modify, amend, supplement, or supersede any provision of the assumed loan documents.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Assignor's Indemnification. Subject to the limitations set forth in the PSA (including, without limitation, the General Representation Cap, the Fundamental Representation Cap, the Basket, the De Minimis Threshold, and the applicable survival periods), Assignor shall indemnify, defend, and hold harmless Assignee and its officers, trustees, employees, agents, successors, and assigns (collectively, the "Assignee Indemnified Parties") from and against any and all claims, demands, actions, causes of action, losses, damages, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees and court costs) arising out of or relating to any of the Assigned Interests that are attributable to or arise from events, acts, omissions, or circumstances occurring during the period prior to the Closing Date, including, without limitation, any breach or default by Assignor or any Target Entity under any Lease, Service Contract, or obligation related to the Intangible Property attributable to such pre-closing period. The parties acknowledge that supplemental coverage is provided by the representations and warranties insurance policy issued by Sentinel Specialty Insurance Company (Policy No. SSI-2024-CRE-04287) with a policy limit of Fifty-Five Million Dollars ($55,000,000) and a self-insured retention of Eleven Million Dollars ($11,000,000) during the first twelve (12) months following the Closing Date, dropping to Five Million Five Hundred Thousand Dollars ($5,500,000) thereafter.
Section 8.2 Assignee's Indemnification. Assignee shall indemnify, defend, and hold harmless Assignor and its partners, members, managers, officers, employees, agents, successors, and assigns (collectively, the "Assignor Indemnified Parties") from and against any and all claims, demands, actions, causes of action, losses, damages, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees and court costs) arising out of or relating to any of the Assigned Interests that are attributable to or arise from events, acts, omissions, or circumstances occurring during the period from and after the Closing Date, including, without limitation, any breach or default by Assignee or any Target Entity under any Lease, Service Contract, or obligation related to the Intangible Property attributable to such post-closing period.
Section 8.3 Incorporation of PSA Indemnification Terms. The indemnification provisions of this Article VIII are subject to and governed by the indemnification provisions of the PSA, including Article XII thereof, and the terms and conditions of the Indemnity Escrow Agreement, pursuant to which Sixteen Million Five Hundred Thousand Dollars ($16,500,000) is held in escrow by Commonwealth National Title Insurance Company for a term of eighteen (18) months following the Closing Date (expiring December 6, 2025) to secure Assignor's indemnification obligations. In the event of any conflict between the indemnification provisions of this Assignment and the indemnification provisions of the PSA, the provisions of the PSA shall control.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Governing Law. This Assignment shall be governed by, construed, and enforced in accordance with the laws of the State of New York, without giving effect to any principles of conflicts of law that would result in the application of the laws of any other jurisdiction, consistent with the governing law provision set forth in the PSA. Notwithstanding the foregoing, to the extent that matters of title, recording, landlord-tenant relations, or the creation, perfection, priority, or enforcement of liens or security interests are governed by the local real property law of the state in which a Property is located, the laws of the applicable state — Georgia, Texas, Florida, Tennessee, or North Carolina, as the case may be — shall govern such matters.
Section 9.2 Binding Effect; Successors and Assigns. This Assignment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, assigns, heirs, executors, administrators, and legal representatives. Neither party may assign its rights or obligations under this Assignment without the prior written consent of the other party, except as expressly permitted by the PSA.
Section 9.3 Entire Agreement. This Assignment, together with the PSA, the Membership Interest Assignments, the Transition Services Agreement, the Indemnity Escrow Agreement, and the other closing documents delivered concurrently herewith, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, representations, negotiations, and communications, whether oral or written, with respect to such subject matter.
Section 9.4 Amendments. This Assignment may not be amended, modified, supplemented, restated, or waived except by a written instrument duly executed by both Assignor and Assignee. No oral amendment or modification shall be effective.
Section 9.5 Counterparts. This Assignment may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. The exchange of copies of this Assignment and of signature pages hereto by electronic mail in portable document format (.pdf) or by other electronic transmission shall constitute effective execution and delivery of this Assignment as to the parties hereto and may be used in lieu of the original Assignment for all purposes. Electronic signatures and digital signatures complying with applicable law shall be deemed original signatures for all purposes.
Section 9.6 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted to be given under this Assignment shall be given in accordance with the notice provisions set forth in the PSA. For convenience of reference, the key notice addresses of the parties are as follows:
If to Assignor:
Greystone Meridian Partners Fund III, L.P. 3300 Peachtree Road NE, Suite 2200 Atlanta, Georgia 30326
Attention: Victor Lansdell and Elise Rathborne, Co-Founders & Managing Partners
Telephone: (404) 555-3200
Email: vlansdell@greystonemeridian.com; erathborne@greystonemeridian.com
with a copy (which shall not constitute notice) to:
Blackridge Hayes LLP 1285 Avenue of the Americas, 34th Floor New York, New York 10019
Attention: Nathaniel Pryce, Esq.
Telephone: (212) 555-7100
Email: npryce@blackridgehayes.com
If to Assignee:
Fairwater Real Estate Investment Trust 7200 Chesapeake Parkway, Suite 1100 Columbia, Maryland 21044
Attention: David Elgin Park, General Counsel, and Marcus Devereaux, EVP, Acquisitions
Telephone: (410) 555-8800
Email: dpark@fairwaterreit.com; mdevereaux@fairwaterreit.com
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, New York 10022
Attention: Douglas Fairchild, Esq.
Telephone: (212) 555-4500
Email: dfairchild@calderwoodharkness.com
Section 9.7 Severability. If any provision of this Assignment, or the application thereof to any person, entity, or circumstance, shall be held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the remainder of this Assignment, and the application of such provision to other persons, entities, or circumstances, shall not be affected thereby and shall remain in full force and effect, and the parties shall negotiate in good faith a valid, legal, and enforceable substitute provision that most nearly gives effect to the original intent of the parties.
Section 9.8 No Third-Party Beneficiaries. Except as expressly provided in the PSA (including, without limitation, with respect to the rights of Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company, as existing mortgage lenders), this Assignment is not intended to and shall not confer any rights, benefits, remedies, obligations, or liabilities upon any person or entity other than the parties hereto and their respective permitted successors and assigns.
Section 9.9 Waiver. No waiver of any breach, default, or failure of condition under this Assignment shall be deemed a waiver of any subsequent breach, default, or failure of condition, whether of a like or different nature. No waiver shall be effective unless in writing and signed by the party granting the waiver. No failure or delay by either party in exercising any right, power, or privilege under this Assignment shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.
Section 9.10 Construction. The section headings and article headings contained in this Assignment are for convenience of reference only and shall not affect in any way the meaning, interpretation, or construction of this Assignment. Whenever used in this Assignment, the word "including" (and correlative words such as "include" and "includes") means "including without limitation." References to "herein," "hereof," "hereunder," and similar terms refer to this Assignment as a whole and not to any particular section or provision hereof. This Assignment has been negotiated by the parties with the benefit of legal representation, and no rule of construction or interpretation shall apply against either party as the drafter hereof.
[Remainder of Page Intentionally Left Blank — Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Assignment and Assumption of Leases, Contracts, and Intangibles as of the date first written above.
ASSIGNOR:
GREYSTONE MERIDIAN PARTNERS FUND III, L.P., a Delaware limited partnership
By: Greystone Meridian Capital LLC,
a Delaware limited liability company, its General Partner
By: ________
Name: Victor Lansdell
Title: Co-Founder & Managing Partner
Date: June 6, 2024
ASSIGNEE:
FAIRWATER REAL ESTATE INVESTMENT TRUST, a Maryland real estate investment trust
By: ________
Name: Marcus Devereaux
Title: Executive Vice President, Acquisitions
Date: June 6, 2024
ACKNOWLEDGMENTS
STATE OF GEORGIA COUNTY OF FULTON
Before me, the undersigned, a Notary Public in and for the State of Georgia, on this 6th day of June, 2024, personally appeared Victor Lansdell, known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument, and acknowledged to me that he executed the same in his capacity as Co-Founder & Managing Partner of Greystone Meridian Capital LLC, a Delaware limited liability company, the general partner of Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership, and that by his signature on the instrument, the entity upon behalf of which the person acted executed the instrument for the purposes and consideration therein expressed.
________________________________________
Notary Public, State of Georgia My Commission Expires: ____
[NOTARIAL SEAL]
STATE OF MARYLAND COUNTY OF HOWARD
Before me, the undersigned, a Notary Public in and for the State of Maryland, on this 6th day of June, 2024, personally appeared Marcus Devereaux, known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument, and acknowledged to me that he executed the same in his capacity as Executive Vice President, Acquisitions, of Fairwater Real Estate Investment Trust, a Maryland real estate investment trust, and that by his signature on the instrument, the entity upon behalf of which the person acted executed the instrument for the purposes and consideration therein expressed.
________________________________________
Notary Public, State of Maryland My Commission Expires: ____
[NOTARIAL SEAL]
EXHIBIT A
LIST OF TARGET ENTITIES
The following table sets forth each of the fourteen (14) Target Entities, together with the corresponding Property, entity formation details, and loan designations:
Loan Summary: