PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP
450 Park Avenue, 28th Floor New York, New York 10022 Telephone: (212) 555-7400
1700 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-3100
CLOSING AGENDA
Matter: Fairwater Real Estate Investment Trust — Acquisition of 14-Property Sun Belt Logistics & Office Portfolio from Greystone Meridian Partners Fund III, L.P.
Matter Number: 1036-00004
Closing Date: June 6, 2024
Closing Location: Funds transfer closing; all documents held in escrow by Commonwealth National Title Insurance Company, 191 Peachtree Street NE, Suite 800, Atlanta, Georgia 30303 (Kenneth Stanhope, Senior Vice President, Title Officer)
Prepared by: Grace Nakamura, Lead Associate, Calderwood & Harkness LLP
Supervised by: Douglas Fairchild, Responsible Partner, Calderwood & Harkness LLP
Distribution: See Distribution List (Section I below)
Date of This Closing Agenda: June 5, 2024 (Final Pre-Closing Version)
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I. DISTRIBUTION LIST
The following individuals and their respective organizations shall each receive a complete copy of this Closing Agenda, together with all Exhibits and Attachments referenced herein. Following the closing, Calderwood & Harkness LLP will circulate a final, conformed version of this Closing Agenda reflecting the actual closing date and any closing-day modifications, together with a complete set of fully executed closing documents in both electronic (.pdf) and, where applicable, original hard-copy form.
A. Buyer — Fairwater Real Estate Investment Trust
• Marcus Devereaux, Executive Vice President, Acquisitions
• David Elgin Park, General Counsel
• Camille Oduya, In-House Real Estate Counsel
• Patricia Sung-Calloway, Chief Financial Officer
• Leah Torrance, Senior Vice President, Asset Management
B. Buyer's Counsel — Calderwood & Harkness LLP
• Douglas Fairchild, Responsible Partner (Real Estate Department)
• Angela Fontaine, Billing Partner (Real Estate Department)
• Grace Nakamura, Lead Associate (Real Estate Department)
• Rafael Dominguez, Working Associate (Real Estate Department)
• Sylvia Hartwell, Specialist Partner (Tax Department)
C. Seller — Greystone Meridian Partners Fund III, L.P. / Greystone Meridian Capital LLC (as General Partner)
• Victor Lansdell, Co-Founder & Managing Partner
• Elise Rathborne, Co-Founder & Managing Partner
• Sean Kilpatrick, Portfolio Manager, Argyle Property Services LLC (Seller Affiliate)
D. Seller's Counsel — Blackridge Hayes LLP
• Nathaniel Pryce, Lead Partner (Real Estate Department)
• Ingrid Solberg, Partner (Tax Department)
• Thomas Keating, Senior Associate (Real Estate Department)
E. Title Company / Escrow Agent — Commonwealth National Title Insurance Company
• Kenneth Stanhope, Senior Vice President, Title Officer
• Virginia Moorehead, Assistant Vice President, National Counsel
F. Pinnacle Federal Bank, N.A. (Senior Mortgage Lender)
• Bradley Carston, Senior Vice President, Loan Officer
• Sandra Whitfield, Partner, Whitfield & Archer LLP (Lender's Counsel)
G. Veltrano Capital Lending Corp. (Mortgage Lender)
• Denise Alvarado, Managing Director
• Leo Cranford, Partner, Cranford McCabe LLP (Lender's Counsel)
H. Sycamore Life Insurance Company (Mortgage Lender)
• Graham Hilliard, Vice President, Mortgage Investments
• Claire Wynn, Partner, Partridge Wynn & Slater LLP (Lender's Counsel)
I. Buyer's Accountants — Ashford Prewitt LLP
• Martin Ashford, CPA, Engagement Partner
• Naomi Ikeda, CPA, Tax Partner
J. Buyer's Revolver Agent Bank — Aldgate National Bank, N.A.
• Trevor Kingsley, Managing Director, Real Estate Banking
K. Insurance Broker — Hartwick Gunderson & Associates, Inc.
• Peter Langford, Account Executive
L. Local Counsel
• James Breckenridge, Breckenridge Osgood LLP — Texas
• Catherine Beaumont, Talmadge Beaumont LLP — Georgia
• marshall Haversham, Haversham Cole PLLC — North Carolina
• Diane Ellsworth, Ellsworth Ridley LLP — Tennessee
• Roberto Strauss, Palmetto Strauss PA — Florida
II. TRANSACTION SUMMARY
The following is a summary of the principal terms and structure of the transaction. This summary is provided for convenience of reference only and is qualified in its entirety by the provisions of the Purchase and Sale Agreement and the other closing documents described in this Closing Agenda.
Transaction Structure. The transaction is structured as an entity-level acquisition by Fairwater Real Estate Investment Trust, a Maryland real estate investment trust (the "Buyer" or "Fairwater REIT"), of one hundred percent (100%) of the membership interests (the "Interests") in each of fourteen (14) property-owning single-purpose Delaware limited liability companies (collectively, the "Target Entities") from Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership (the "Seller" or "GMP Fund III"). Greystone Meridian Capital LLC, a Delaware limited liability company ("GMC"), serves as the general partner of GMP Fund III and has authorized the transaction on behalf of the Seller. Because the transaction is structured as a transfer of entity-level interests rather than a direct conveyance of the real property assets, fee title to each of the fourteen (14) properties remains vested in the respective Target Entity, and no deeds of conveyance are required. However, the transfer of membership interests constitutes a "change of control" under each of the existing mortgage loan agreements encumbering the properties and, accordingly, the prior written consent of each lender has been obtained as a condition precedent to closing.
Purchase Price. The aggregate purchase price for the Interests in all fourteen (14) Target Entities is One Billion One Hundred Million Dollars ($1,100,000,000) (the "Purchase Price").
Assumed Mortgage Debt. The Target Entities are collectively encumbered by mortgage indebtedness with an aggregate outstanding principal balance of Six Hundred Twelve Million Dollars ($612,000,000) as of the Closing Date, held by three (3) institutional lenders as follows:
(a) Pinnacle Federal Bank, N.A. — Loans 1-A through 1-H: $421,600,000 outstanding principal balance; 4.22% fixed rate; maturing July 1, 2028.
(b) Veltrano Capital Lending Corp. — Loans 2-A through 2-D: $142,300,000 outstanding principal balance; 4.68% fixed rate; maturing March 1, 2029.
(c) Sycamore Life Insurance Company — Loans 3-A and 3-B: $48,100,000 outstanding principal balance; 3.95% fixed rate; maturing December 1, 2030.
Cash Equity at Closing. The cash equity payable by Buyer at closing, prior to application of the PCA Repair Credit and closing prorations, is Four Hundred Eighty-Eight Million Dollars ($488,000,000), representing the Purchase Price less the aggregate outstanding principal balance of the assumed mortgage debt.
PCA Repair Credit. Pursuant to Section 7.04(b) of the PSA, Buyer is entitled to a credit at closing in the amount of One Million Seventy Thousand Dollars ($1,070,000) for deferred maintenance items identified in the property condition assessments conducted during the Due Diligence Period (the "PCA Repair Credit"). The PCA Repair Credit is applied as a reduction of the Purchase Price.
Adjusted Cash to Seller. The adjusted cash payable to Seller at closing, prior to prorations, is Four Hundred Eighty-Six Million Nine Hundred Thirty Thousand Dollars ($486,930,000), calculated as the cash equity of $488,000,000 less the PCA Repair Credit of $1,070,000.
Governing Agreement. The transaction is governed by that certain Purchase and Sale Agreement dated as of February 28, 2024, by and between Buyer and Seller, as amended by the First Amendment to Purchase and Sale Agreement dated as of April 12, 2024, and the Second Amendment to Purchase and Sale Agreement dated as of May 28, 2024 (as so amended, the "PSA").
Governing Law. The PSA is governed by the laws of the State of New York, without regard to its conflicts-of-law principles. Local real property law of the respective state in which each property is located (Georgia, Texas, Florida, Tennessee, and North Carolina) governs matters of title, recording, tenant relations, and transfer taxation.
Original Scheduled Closing Date. The original scheduled closing date under the PSA was May 31, 2024.
Extended Outside Date. Pursuant to the Second Amendment dated May 28, 2024, the parties agreed to extend the Outside Date (as defined in the PSA) to June 7, 2024, to accommodate the pending receipt of the lender consent from Pinnacle Federal Bank, N.A. The required lender consent from Pinnacle Federal Bank was received on June 4, 2024.
Actual Closing Date. June 6, 2024.
Reason for Closing Delay. The closing was delayed beyond the original scheduled date of May 31, 2024, solely as a result of the pending final lender consent from Pinnacle Federal Bank, N.A. with respect to Loans 1-A through 1-H ($421,600,000 aggregate outstanding principal balance). Pinnacle Federal Bank's consent letter was executed and delivered to Commonwealth National Title Insurance Company on June 4, 2024. Upon receipt and confirmation of the Pinnacle consent, the parties confirmed closing for June 6, 2024, within the extended Outside Date.
III. CLOSING SEQUENCE OVERVIEW
The closing of the transaction contemplated by the PSA is being conducted as a funds transfer closing (commonly referred to as an "escrow closing"), with all closing documents held in escrow by Commonwealth National Title Insurance Company ("Commonwealth Title" or the "Escrow Agent") at its national office located at 191 Peachtree Street NE, Suite 800, Atlanta, Georgia 30303, under the direction of Kenneth Stanhope, Senior Vice President and Title Officer. No in-person closing table is required. The closing will proceed in the following sequence:
Step 1: Pre-Closing Confirmation of All Conditions Precedent. Prior to the initiation of any wire transfers on the Closing Date, Calderwood & Harkness LLP, as Buyer's counsel, and Blackridge Hayes LLP, as Seller's counsel, will each independently confirm that all conditions precedent to their respective client's obligation to close under Article IX of the PSA have been satisfied or waived in writing. This confirmation process has been substantially completed as of the date of this Closing Agenda, and the status of each material condition precedent is set forth in detail in Section IV below. Any remaining open items will be confirmed telephonically on the morning of the Closing Date prior to the release of funds.
Step 2: Execution and Delivery of All Closing Documents Into Escrow. All closing documents requiring execution by either party have been executed in counterparts and delivered to the Escrow Agent to be held in escrow pending confirmation of all wire transfers. In certain cases, documents were executed and delivered to escrow on a rolling basis during the pre-closing period. Each executed document has been reviewed by Calderwood & Harkness LLP and Blackridge Hayes LLP for completeness, conformity with the PSA requirements, and proper execution by authorized signatories. A complete inventory of all documents held in escrow is set forth in Section V below.
Step 3: Confirmation of Funds Flow and Wire Transfers. On the Closing Date, Buyer will initiate all wire transfers required to consummate the closing, including (i) the transfer of the adjusted cash equity amount to the Escrow Agent for credit to Seller, (ii) the funding of the indemnity escrow, (iii) the payment of lender consent fees, (iv) the payment of transfer taxes, (v) the payment of title insurance premiums, and (vi) the payment of the representations and warranties insurance premium. Seller's share of transfer taxes and consent fees will be deducted from Seller's closing proceeds. The detailed funds flow is set forth in Section VI below. All wires are to be initiated no later than 10:00 a.m. Eastern Time on June 6, 2024.
Step 4: Release of Documents and Funds by Escrow Agent. Commonwealth Title will not release any documents from escrow, and will not disburse any funds to Seller or any other party, until the Escrow Agent has received confirmation that all wire transfers listed in the Funds Flow Memorandum (Exhibit 1) have been received and are available in collected funds. Upon such confirmation, the Escrow Agent will (i) authorize the release of all executed closing documents, (ii) disburse the net cash proceeds to Seller in accordance with Seller's verified wire instructions, (iii) fund the indemnity escrow account, (iv) disburse all third-party payments, and (v) confirm the closing as effective. The closing shall be deemed effective upon Commonwealth Title's confirmation of all fund receipts and its authorization to release documents and disburse funds.
Step 5: Post-Closing Deliverables. Certain deliverables are required to be completed following the closing, including tenant notification letters, entity organizational amendments, foreign qualification filings, UCC termination filings, recording confirmations, and the issuance of final title insurance policies. The complete schedule of post-closing deliverables and obligations is set forth in Section VII below.
IV. PRE-CLOSING CONDITIONS PRECEDENT — CONFIRMATION STATUS
The following is a detailed summary of the status of each material condition precedent to closing as of the date of this Closing Agenda. Unless otherwise indicated, each condition has been satisfied.
A. Lender Consents (Change of Control)
The transfer of 100% of the membership interests in each Target Entity from Seller to Buyer constitutes a "change of control" or "transfer" event under each of the existing mortgage loan agreements encumbering the properties. Accordingly, the prior written consent of each lender is required as a condition precedent to closing. The following table summarizes the status of each lender consent:
Total Consent Fees: $1,825,625. Pursuant to Section 11.02(c) of the PSA, lender consent fees are split equally between Buyer and Seller: Buyer's share is $912,812.50; Seller's share is $912,812.50. Payment of consent fees will be made by wire transfer on the Closing Date in accordance with the Funds Flow Memorandum (Section VI below). Seller's share will be deducted from Seller's closing proceeds.
Each lender consent letter has been reviewed by Calderwood & Harkness LLP and Blackridge Hayes LLP for compliance with the terms of the respective loan agreements and the PSA. Copies of each executed consent letter have been delivered to Commonwealth Title.
B. Tenant Estoppels
Pursuant to Section 9.01(g) of the PSA, Buyer's obligation to close is conditioned upon receipt of executed tenant estoppel certificates from tenants representing not less than eighty percent (80%) of the aggregate in-place annual base rent at the properties ("ABR"). In addition, estoppels must be received from all Major Tenants (defined in the PSA as tenants occupying 25,000 or more rentable square feet at any single property).
As of the date of this Closing Agenda, the status of tenant estoppels is as follows:
• Total tenants across the 14-property portfolio: 87
• Executed estoppel certificates received: 79 of 87
• ABR coverage of executed estoppels: $68,371,200 of $74,800,000 aggregate in-place annual base rent, representing 91.4% of ABR
• PSA threshold (80% of in-place ABR): $59,840,000 — SATISFIED
• Major Tenant estoppels (all tenants ≥ 25,000 RSF): All required Major Tenant estoppels have been received — SATISFIED
The eight (8) outstanding estoppels represent smaller tenants whose aggregate ABR totals approximately $6,428,800. None of these tenants individually constitutes a Major Tenant, and their non-delivery does not impair the satisfaction of the 80% ABR threshold.
C. Subordination, Non-Disturbance and Attornment Agreements (SNDAs)
Pursuant to Section 9.01(h) of the PSA, Buyer's obligation to close is conditioned upon receipt of executed Subordination, Non-Disturbance and Attornment Agreements ("SNDAs") from tenants designated as Major Tenants in the PSA. As of the date of this Closing Agenda, the status of SNDAs is as follows:
• Total required Major Tenant SNDAs: 38
• Executed SNDAs received: 34 of 38, representing 89.5% of required SNDAs
• Remaining SNDAs: 4 SNDAs outstanding
The four (4) remaining SNDAs are subject to the SNDA Post-Closing Carve-Out Side Letter (Items 22 and 25), pursuant to which Seller has acknowledged its post-closing obligation to use commercially reasonable efforts to deliver the remaining SNDAs within thirty (30) days following the Closing Date (i.e., by July 6, 2024). As additional assurance, Two Hundred Thousand Dollars ($200,000) of Seller's closing proceeds will be held back by Commonwealth Title and released to Seller upon confirmed delivery of the four remaining SNDAs.
D. Title and Survey
All title and survey conditions precedent have been satisfied as follows:
• Final ALTA/NSPS Surveys: Certified surveys for all fourteen (14) properties have been completed by Meridian Land Surveying, Inc. (Daniel Caulfield, PLS, PE) and certified to Buyer (Fairwater REIT), Commonwealth National Title Insurance Company, and each applicable mortgage lender.
• Pro Forma ALTA Owner's Policies: Pro forma ALTA Owner's Title Insurance Policies (2021 form) have been approved by Commonwealth Title for all fourteen (14) properties. The aggregate insured amount is $1,100,000,000, allocated among the properties in accordance with the Purchase Price Allocation Schedule (PSA Exhibit K).
• Title Objections: All title objections raised by Buyer during the Due Diligence Period have been resolved in accordance with the Title Objection Response and Cure Letter exchanged between the parties. The list of permitted exceptions has been agreed upon by the parties and is set forth in PSA Exhibit P.
• Gap Indemnity / Bring-Down Letter: Commonwealth Title has issued a gap indemnity and bring-down letter confirming coverage for any matters arising in the gap period between the effective date of each title commitment and the recording of any applicable closing documents on the Closing Date.
E. Due Diligence Contingency
The Due Diligence Period under the PSA expired on April 15, 2024. Buyer elected not to terminate the PSA during the Due Diligence Period, thereby waiving its due diligence contingency. On April 16, 2024, Buyer delivered the Additional Deposit of Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000) to Commonwealth Title, which deposit became non-refundable (i.e., "hard") upon delivery. Together with the Initial Deposit of $27,500,000 previously delivered, the aggregate deposits held in escrow by Commonwealth Title total Fifty-Five Million Dollars ($55,000,000). The aggregate deposits will be applied to the Purchase Price at closing.
F. Zoning Confirmation
Zoning confirmation letters or certificates have been obtained from the applicable municipal or county zoning authority for each of the fourteen (14) properties, confirming that the current use of each property is a permitted use (or a legal nonconforming use) under the applicable zoning ordinance and that no zoning violations exist. This condition precedent is SATISFIED.
G. Environmental. Phase I Environmental Site Assessments ("Phase I ESAs") have been completed for all fourteen (14) properties. The results are summarized as follows:
• Clean Phase I ESAs (no recognized environmental conditions): 12 of 14 properties
• Phase I ESAs with de minimis recognized environmental conditions ("RECs"): 2 properties:
(i) Westlake Distribution Hub (GMP Westlake LLC; Houston, TX) — de minimis REC relating to historical dry cleaning operations on an adjacent parcel; controlled; no further action recommended.
(ii) Lakeland Crossings Industrial (GMP Lakeland LLC; Lakeland, FL) — de minimis REC relating to a former above-ground storage tank with documented clean closure; controlled; no further action recommended.
• Phase II ESA Required: None. The environmental consultant has confirmed that no Phase II Environmental Site Assessment is required for any property.
This condition precedent is SATISFIED.
H. Replacement Guaranties
Each of the three (3) existing mortgage loan facilities requires that the borrower (or its direct or indirect owner) maintain a carve-out guaranty with minimum net worth and liquidity covenants. In connection with the change of control from Seller to Buyer, each lender has required that Fairwater REIT execute and deliver a replacement carve-out guaranty in favor of such lender, in substitution for the existing guaranty provided by the Seller or its affiliates. The terms of the replacement guaranties are as follows:
• Guarantor: Fairwater Real Estate Investment Trust
• Guarantor Net Worth Covenant: Minimum tangible net worth of not less than $500,000,000 at all times
• Guarantor Liquidity Covenant: Minimum liquid assets (cash and cash equivalents) of not less than $50,000,000 at all times
• Compliance Status: Fairwater REIT has confirmed compliance with both covenants as of the Closing Date
Replacement carve-out guaranties have been executed by Fairwater REIT in favor of each of Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and Sycamore Life Insurance Company and have been delivered to the respective lenders through the Escrow Agent. This condition precedent is SATISFIED.
I. Insurance. Property and Casualty Insurance. Replacement property and casualty insurance policies have been bound with Ironclad Indemnity Insurance Company, effective as of June 6, 2024, satisfying the insurance requirements set forth in PSA Exhibit M and the requirements of each mortgage lender. Certificates of insurance naming the applicable lenders as additional insured parties and/or loss payees, as required by the respective loan agreements, have been delivered. This condition precedent is SATISFIED.
Representations and Warranties Insurance. A representations and warranties insurance policy has been bound with Sentinel Specialty Insurance Company, effective as of June 6, 2024, with the following terms:
• Policy limit: $55,000,000 (5% of Purchase Price)
• Retention: $11,000,000 (1% of Purchase Price); retention drops to $5,500,000 at 12 months post-closing
• Premium: $1,402,500 (2.55% of policy limit)
• Broker: Hartwick Gunderson & Associates, Inc. (Peter Langford, Account Executive)
The R&W insurance policy provides Buyer with additional recourse beyond the indemnity escrow for breaches of Seller's representations and warranties in the PSA. This condition precedent is SATISFIED.
J. Revolver Draw Confirmation
Buyer intends to fund the cash equity required for closing through a draw on its existing unsecured revolving credit facility with Aldgate National Bank, N.A. The details of the revolver draw are as follows:
• Facility: $750,000,000 Unsecured Revolving Credit Facility, dated August 14, 2022, between Fairwater Real Estate Investment Trust and Aldgate National Bank, N.A., as administrative agent
• Anticipated Draw Amount: Approximately $488,000,000 (subject to final settlement statement adjustments)
• Interest Rate: Term SOFR + 130 basis points
• Borrowing Notice: Delivered by Fairwater REIT to Aldgate National Bank, N.A. (Trevor Kingsley, Managing Director, Real Estate Banking) in accordance with the facility agreement
• Funds Availability: Aldgate National Bank has confirmed that funds will be available for closing-day wire transfers on June 6, 2024
This condition precedent is SATISFIED.
V. CLOSING DOCUMENTS — DETAILED AGENDA
The following is a comprehensive list of all closing documents to be executed and/or delivered at closing. Unless otherwise indicated, all documents listed below have been executed and are held in escrow by Commonwealth National Title Insurance Company pending confirmation of all wire transfers on the Closing Date. Item numbers are assigned for tracking purposes and correspond to the document numbering system used in the Exhibits and Attachments to this Closing Agenda.
A. Membership Interest Transfer Documents (Items 1–14)
For each of the fourteen (14) Target Entities listed below, an Assignment and Assumption of Membership Interests (in the form attached as Exhibit B to the PSA) has been executed, transferring one hundred percent (100%) of the membership interests in such Target Entity from Seller (Greystone Meridian Partners Fund III, L.P.) to Buyer (Fairwater Real Estate Investment Trust). Each Assignment and Assumption of Membership Interests is executed by Seller (through Greystone Meridian Capital LLC, as General Partner of GMP Fund III, by Victor Lansdell, authorized signatory) and Buyer (Fairwater REIT, by Marcus Devereaux, Executive Vice President, Acquisitions).
Execution Responsibility:
Seller: Greystone Meridian Capital LLC, a Delaware limited liability company, as General Partner of Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership
By: Victor Lansdell, Co-Founder & Managing Partner, authorized signatory pursuant to resolutions of the members of Greystone Meridian Capital LLC
Buyer: Fairwater Real Estate Investment Trust, a Maryland real estate investment trust
By: Marcus Devereaux, Executive Vice President, Acquisitions, authorized signatory pursuant to resolutions of the Board of Trustees of Fairwater REIT
B. Seller's Closing Deliverables (Items 15–22)
The following documents are to be executed and/or delivered by or on behalf of Seller at closing:
Item 15 — Seller's Closing Certificate. A certificate executed by Seller (Greystone Meridian Partners Fund III, L.P., by Greystone Meridian Capital LLC, as General Partner, by Victor Lansdell, authorized signatory) certifying (i) the truth and accuracy of Seller's representations and warranties set forth in Article V of the PSA as of the Closing Date (June 6, 2024), (ii) the satisfaction or waiver of all conditions precedent to Seller's obligations under the PSA, and (iii) the absence of any material adverse change since the date of the PSA. This bring-down certificate is delivered pursuant to Section 9.01(a) of the PSA.
Item 16 — FIRPTA Certificate (Non-Foreign Person Affidavit). A certificate executed by Seller (GMP Fund III; EIN 83-1647205) pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.1445-2(b), certifying that Seller is not a "foreign person" as defined in Section 1445 of the Code. This certificate is delivered to Buyer to relieve Buyer of the obligation to withhold tax from the purchase price under FIRPTA. The certificate sets forth Seller's name, address, and taxpayer identification number (EIN 83-1647205).
Item 17 — Secretary's Certificate — Seller. A certificate executed by Elise Rathborne, Co-Founder & Managing Partner of Greystone Meridian Capital LLC, certifying as to (i) the resolutions of the members of GMC authorizing the sale of the Interests in all fourteen (14) Target Entities and the execution and delivery of all closing documents by Victor Lansdell on behalf of GMP Fund III, (ii) the incumbency and specimen signatures of all authorized signatories, and (iii) true and correct copies of the organizational documents of both Greystone Meridian Capital LLC (certificate of formation, limited liability company agreement) and Greystone Meridian Partners Fund III, L.P. (certificate of limited partnership, limited partnership agreement), each as currently in effect.
Item 18 — Title Affidavit — Seller (Owner's Affidavit). Fourteen (14) owner's affidavits, one for each Target Entity, executed by Victor Lansdell on behalf of GMP Fund III (as the sole member of each Target Entity), in the form attached as Exhibit T to the PSA, for delivery to Commonwealth National Title Insurance Company. Each affidavit contains customary representations regarding the absence of unpaid mechanic's liens, parties in possession other than tenants under recorded leases, pending litigation affecting the property, and other matters required by the title company to issue its owner's title insurance policy.
Item 19 — Bill of Sale — Personal Property. A portfolio-wide bill of sale executed by Seller, transferring to Buyer (through the Target Entities) all right, title, and interest in and to the tangible personal property located at each of the fourteen (14) properties, including furniture, fixtures, equipment, tools, supplies, vehicles, and other tangible personal property used in the operation and maintenance of the properties. This bill of sale is supplemental to the entity-level transfer accomplished by the Assignments and Assumptions of Membership Interests and is provided to evidence the transfer of personal property for sales tax and other purposes.
Item 20 — Assignment and Assumption of Leases, Contracts, and Intangibles. A portfolio-wide assignment and assumption agreement executed by Seller and Buyer, pursuant to which Seller assigns and Buyer assumes all of Seller's right, title, and interest in and to (i) all leases and rental agreements affecting the properties, (ii) all service contracts, management agreements, and vendor contracts in effect with respect to the properties, and (iii) all intangible property associated with the properties, including trade names, permits, licenses, warranties, guaranties, and development rights. This assignment is supplemental to the entity-level transfer and is provided for the avoidance of doubt to confirm the scope of the assets and obligations being transferred.
Item 21 — Wire Transfer Instructions — Seller. Verified wire transfer instructions for the account of Greystone Meridian Partners Fund III, L.P. at Magnolia Commerce Bank, N.A., 225 Peachtree Street NE, Suite 100, Atlanta, Georgia 30303 (contact: Linda Prescott, Vice President). Wire instructions have been independently verified by Calderwood & Harkness LLP and Commonwealth National Title Insurance Company through direct callback confirmation with the bank contact.
Item 22 — SNDA Post-Closing Carve-Out Side Letter (Seller Counterpart). A side letter executed by Seller (by Victor Lansdell) acknowledging (i) that four (4) of the thirty-eight (38) required Major Tenant SNDAs remain outstanding as of the Closing Date, (ii) Seller's post-closing obligation to use commercially reasonable efforts to deliver the remaining SNDAs within thirty (30) days following the Closing Date (i.e., by July 6, 2024), and (iii) the holdback of Two Hundred Thousand Dollars ($200,000) from Seller's closing proceeds by Commonwealth Title, to be released to Seller upon confirmed delivery of the four remaining SNDAs.
C. Buyer's Closing Deliverables (Items 23–27)
The following documents are to be executed and/or delivered by or on behalf of Buyer at closing:
Item 23 — Buyer's Closing Certificate. A certificate executed by Buyer (Fairwater Real Estate Investment Trust, by Marcus Devereaux, Executive Vice President, Acquisitions) certifying (i) the truth and accuracy of Buyer's representations and warranties set forth in Article VI of the PSA as of the Closing Date (June 6, 2024), (ii) the satisfaction or waiver of all conditions precedent to Buyer's obligations under the PSA, and (iii) the availability of funds to consummate the closing. This bring-down certificate is delivered pursuant to Section 9.02(a) of the PSA.
Item 24 — Secretary's Certificate — Buyer. A certificate executed by David Elgin Park, General Counsel of Fairwater Real Estate Investment Trust, certifying as to (i) the resolutions of the Board of Trustees of Fairwater REIT authorizing the acquisition of the Interests in the fourteen (14) Target Entities at an aggregate Purchase Price of $1,100,000,000, the execution and delivery of all closing documents, and the appointment of Marcus Devereaux as authorized signatory for closing purposes, (ii) the incumbency and specimen signatures of all authorized signatories, and (iii) true and correct copies of the organizational documents of Fairwater REIT (declaration of trust, bylaws), each as currently in effect.
Item 25 — SNDA Post-Closing Carve-Out Side Letter (Buyer Counterpart). A side letter executed by Buyer (by Marcus Devereaux) confirming Buyer's agreement to the terms of the SNDA Post-Closing Carve-Out, including the holdback of $200,000 from Seller's closing proceeds and the release mechanics. Buyer acknowledges its obligation to cooperate in good faith with Seller's efforts to obtain the four remaining SNDAs during the 30-day post-closing period.
Item 26 — R&W Insurance — No-Claims Declaration. A declaration executed by Buyer (by Marcus Devereaux) and delivered to Sentinel Specialty Insurance Company, confirming that, as of the Closing Date, Buyer is not aware of any claims or circumstances that would reasonably be expected to give rise to a claim under the representations and warranties insurance policy. This declaration is a condition precedent to the binding of the R&W insurance policy at closing.
Item 27 — Tenant Notification Letters. Form letters and a distribution list for all eighty-seven (87) tenants across the fourteen (14) properties, notifying such tenants of the change of ownership and providing updated information regarding rent payment instructions, property management contacts, and security deposit custodianship. The letters are prepared in the names of Fairwater Real Estate Investment Trust and Fairwater Property Management LLC (the successor property manager) and will be signed by Leah Torrance, Senior Vice President, Asset Management. The letters are to be distributed by first-class mail and electronic mail on June 7, 2024, the first business day following the Closing Date.
D. Escrow Agreements (Items 28–29)
Item 28 — Escrow Agreement — Indemnity Escrow (Execution Version). An escrow agreement among Buyer, Seller, and Commonwealth National Title Insurance Company (as escrow agent), establishing an indemnity escrow account to be funded at closing in the amount of Sixteen Million Five Hundred Thousand Dollars ($16,500,000), representing 1.5% of the Purchase Price. The indemnity escrow secures Seller's indemnification obligations under Article XII of the PSA for breaches of representations and warranties. The term of the indemnity escrow is eighteen (18) months from the Closing Date, expiring on December 6, 2025, subject to extension with respect to any pending claims. Funds in the escrow account will be invested in money market instruments or other permitted investments as agreed by the parties. Upon expiration of the escrow term (and provided no claims are pending), all remaining funds in the escrow account, together with any accrued interest, will be released to Seller.
Item 29 — Escrow Agreement — Earnest Money Deposit (Closing Release Instructions). Closing release instructions executed by Buyer and Seller, directing Commonwealth National Title Insurance Company to release the aggregate earnest money deposits held in escrow in the amount of Fifty-Five Million Dollars ($55,000,000) (consisting of the Initial Deposit of $27,500,000 and the Additional Deposit of $27,500,000) to Seller's credit as a portion of the Purchase Price. The original escrow agreement governing the earnest money deposits was executed on or about February 28, 2024. The closing release instructions supplement the original escrow agreement and authorize the application of the deposits to the Purchase Price on the Closing Date.
E. Loan Assumption and Lender Consent Documents (Items 30–39)
The transfer of the Interests in the Target Entities constitutes a change of control event under each of the existing mortgage loan agreements. The following documents have been executed and delivered in connection with the assumption of the existing mortgage indebtedness by Buyer and the replacement of the existing carve-out guaranties.
Pinnacle Federal Bank, N.A. (Loans 1-A through 1-H). Loan Summary: $421,600,000 aggregate outstanding principal balance; 4.22% per annum fixed interest rate; maturity date: July 1, 2028. Governed by Master Loan Agreement dated September 15, 2020, as amended, among the applicable Target Entities (GMP Fairfield I LLC, GMP Fairfield II LLC, GMP Westlake LLC, GMP Katy LLC, GMP Alliance LLC, GMP Lakeland LLC, GMP Southport LLC, and GMP Murfreesboro LLC) and Pinnacle Federal Bank, N.A.
Item 30 — Lender Consent — Pinnacle Federal Bank. Consent letter executed by Pinnacle Federal Bank, N.A. (Bradley Carston, Senior Vice President, Loan Officer) on June 4, 2024, consenting to the transfer of the membership interests in the eight (8) Target Entities that serve as borrowers under Loans 1-A through 1-H, subject to the conditions set forth therein, including execution of the Assumption Agreement and Replacement Guaranty described below and payment of the consent fee. Reviewed and approved by Whitfield & Archer LLP (Sandra Whitfield, Partner), counsel to Pinnacle Federal Bank.
Item 31 — Assumption Agreement — Pinnacle Loans. Assumption agreement executed by Fairwater Real Estate Investment Trust (as new indirect owner of the borrower entities), Greystone Meridian Partners Fund III, L.P. (as former indirect owner), and Pinnacle Federal Bank, N.A. Pursuant to this agreement, Fairwater REIT assumes all of the borrower's obligations under the Master Loan Agreement dated September 15, 2020, as amended, and all related loan documents, effective as of the Closing Date. The existing guarantor (GMP Fund III or its affiliate) is released from its obligations under the existing carve-out guaranty concurrently with the delivery of the Replacement Guaranty described below.
Item 32 — Replacement Guaranty — Pinnacle Loans. Replacement carve-out guaranty executed by Fairwater Real Estate Investment Trust in favor of Pinnacle Federal Bank, N.A., guaranteeing the non-recourse carve-out obligations of the borrower entities under Loans 1-A through 1-H, subject to the guarantor net worth covenant ($500,000,000 minimum tangible net worth) and guarantor liquidity covenant ($50,000,000 minimum liquid assets).
Veltrano Capital Lending Corp. (Loans 2-A through 2-D). Loan Summary: $142,300,000 aggregate outstanding principal balance; 4.68% per annum fixed interest rate; maturity date: March 1, 2029. Governed by Loan Agreement dated February 1, 2021, as amended, among the applicable Target Entities (GMP Buckhead LLC, GMP SouthPark LLC, GMP Cool Springs LLC, and GMP Brickell LLC) and Veltrano Capital Lending Corp.
Item 33 — Lender Consent — Veltrano Capital. Consent letter executed by Veltrano Capital Lending Corp. (Denise Alvarado, Managing Director) on May 17, 2024, consenting to the transfer of the membership interests in the four (4) Target Entities that serve as borrowers under Loans 2-A through 2-D. Reviewed and approved by Cranford McCabe LLP (Leo Cranford, Partner), counsel to Veltrano Capital.
Item 34 — Assumption Agreement — Veltrano Loans. Assumption agreement executed by Fairwater REIT, GMP Fund III, and Veltrano Capital Lending Corp., pursuant to which Fairwater REIT assumes all borrower obligations under the Loan Agreement dated February 1, 2021, as amended, effective as of the Closing Date.
Item 35 — Replacement Guaranty — Veltrano Loans. Replacement carve-out guaranty executed by Fairwater REIT in favor of Veltrano Capital Lending Corp., containing the same net worth and liquidity covenants as the Pinnacle Replacement Guaranty.
Sycamore Life Insurance Company (Loans 3-A and 3-B). Loan Summary: $48,100,000 aggregate outstanding principal balance; 3.95% per annum fixed interest rate; maturity date: December 1, 2030. Governed by Note Purchase Agreement dated November 22, 2019, as amended, among the applicable Target Entities (GMP Peachtree LLC and GMP Mount Juliet LLC) and Sycamore Life Insurance Company.
Item 36 — Lender Consent — Sycamore Life Insurance. Consent letter executed by Sycamore Life Insurance Company (Graham Hilliard, Vice President, Mortgage Investments) on May 22, 2024, consenting to the transfer of the membership interests in the two (2) Target Entities that serve as borrowers under Loans 3-A and 3-B. Reviewed and approved by Partridge Wynn & Slater LLP (Claire Wynn, Partner), counsel to Sycamore Life.
Item 37 — Assumption Agreement — Sycamore Loans. Assumption agreement executed by Fairwater REIT, GMP Fund III, and Sycamore Life Insurance Company, pursuant to which Fairwater REIT assumes all borrower obligations under the Note Purchase Agreement dated November 22, 2019, as amended, effective as of the Closing Date.
Item 38 — Replacement Guaranty — Sycamore Loans. Replacement carve-out guaranty executed by Fairwater REIT in favor of Sycamore Life Insurance Company, containing the same net worth and liquidity covenants as the Pinnacle and Veltrano Replacement Guaranties.
Consent Fee Payments. Item 39 — Lender Consent Fee Wire Instructions & Confirmation Memo. Memorandum prepared by Calderwood & Harkness LLP setting forth the verified wire instructions for payment of each lender consent fee and confirming the allocation of consent fees between Buyer and Seller. The consent fees and their allocation are as follows:
Buyer's share of the consent fees ($912,812.50) will be paid by wire transfer from Fairwater REIT on the Closing Date. Seller's share of the consent fees ($912,812.50) will be deducted from Seller's closing proceeds and paid by Commonwealth Title or directly by wire from GMP Fund III, as set forth in the Funds Flow Memorandum.
F. Closing Financial Statements and Prorations (Items 40–43)
Item 40 — Closing Proration Statement (Preliminary). A preliminary closing proration statement prepared jointly by Calderwood & Harkness LLP and Blackridge Hayes LLP, with input from Ashford Prewitt LLP (Buyer's accountants), setting forth the prorations and adjustments between Buyer and Seller as of the Closing Date (June 6, 2024). Key elements of the proration statement include:
• Real Property Taxes: Estimated annual real property taxes for the 14-property portfolio total $14,760,000. Seller's pro rata share of real property taxes for the period from January 1, 2024, through June 5, 2024 (157 days of a 366-day year) is $6,332,951. Buyer is responsible for real property taxes from and after June 6, 2024.
• CAM/OpEx Reconciliation Reserve: A reserve of $1,850,000 has been established to cover the estimated common area maintenance and operating expense reconciliation for the current calendar year, reflecting the transition of management responsibility and the need to true-up tenant charges.
• Security Deposits Transferred: Aggregate security deposits of $4,283,000, held in the operating accounts of the Target Entities at Magnolia Commerce Bank, N.A., are transferred to Buyer with the entities. Because the security deposits are held in entity-level accounts and pass with the membership interests, no separate wire transfer is required.
• Post-Closing True-Up: The preliminary proration statement is subject to a ninety (90) day post-closing true-up, to be completed no later than September 4, 2024, pursuant to Section 11.03(d) of the PSA.
Item 41 — Closing Settlement Statement — Buyer. A comprehensive closing settlement statement for Buyer, setting forth all credits, debits, prorations, and adjustments applied to the Purchase Price at closing, including:
• Purchase Price: $1,100,000,000
• Less: Assumed mortgage debt: ($612,000,000)
• Less: PCA Repair Credit: ($1,070,000)