CALDERWOOD & HARKNESS LLP Attorneys at Law
450 Park Avenue, 28th Floor New York, New York 10022 Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com
March 4, 2024
VIA EMAIL AND OVERNIGHT COURIER
Nathaniel Pryce, Esq. Blackridge Hayes LLP 1285 Avenue of the Americas, 34th Floor New York, New York 10019
Re: Tenant Estoppel Certificates — Portfolio Acquisition Fairwater Real Estate Investment Trust ("Buyer") / Greystone Meridian Partners Fund III, L.P. ("Seller") Purchase and Sale Agreement dated February 28, 2024 (the "PSA") C&H Matter No. 1036-00004
Dear Nathaniel:
1. Purpose and Introduction
We write on behalf of our client, Fairwater Real Estate Investment Trust ("Buyer"), in connection with the above-referenced transaction. The purpose of this letter is to transmit the form of Tenant Estoppel Certificate (the "Estoppel Certificate") required under the PSA for Seller's distribution to all tenants across the fourteen-property portfolio that is the subject of the acquisition (the "Portfolio").
As you are aware, Section 8.2(a) of the PSA sets forth the estoppel delivery obligations of Seller as a condition precedent to Buyer's obligation to close the transactions contemplated thereby. Specifically, the form of Estoppel Certificate is set forth on Exhibit E to the PSA (the "Approved Form"), which was negotiated and agreed upon by the parties during the drafting of the PSA and is intended to satisfy both Buyer's and its lenders' requirements in connection with the closing.
Enclosed herewith please find copies of the Approved Form of Estoppel Certificate (PSA Exhibit E), together with this letter of instruction and the additional enclosures described in Section 10 below. We respectfully request that Seller cause each of the fourteen entities listed in Section 5 below (each, a "Target Entity" and, collectively, the "Target Entities"), in their respective capacities as landlord under the applicable leases, to distribute the Estoppel Certificate to all eighty-seven (87) tenants across the Portfolio in the manner described herein.
Time is of the essence with respect to the estoppel delivery obligations under the PSA, and we appreciate your cooperation and that of your client in ensuring that the distribution and collection process is initiated promptly and managed efficiently. The balance of this letter sets forth the applicable contractual requirements, distribution instructions, and coordination matters for your and Seller's reference.
2. PSA Estoppel Delivery Requirements
For ease of reference, we restate below the contractual requirements governing estoppel delivery as set forth in Section 8.2(a) of the PSA:
(a) Eighty Percent Threshold. Seller shall deliver to Buyer, on or before the Estoppel Delivery Deadline (as defined below), executed Estoppel Certificates from tenants representing at least eighty percent (80%) of the aggregate in-place annual base rent ("ABR") of the Portfolio as set forth on the Rent Roll. Based on the current aggregate in-place ABR of $74,800,000, the eighty percent threshold requires executed Estoppel Certificates from tenants collectively representing not less than $59,840,000 of in-place ABR.
(b) Major Tenant Requirement. In addition to and not in limitation of the foregoing, Seller shall deliver to Buyer executed Estoppel Certificates from every tenant occupying twenty-five thousand (25,000) or more rentable square feet ("RSF") across the Portfolio (each such tenant, a "Major Tenant"). The executed Estoppel Certificate from each Major Tenant is an absolute delivery requirement that may not be satisfied by estoppels from other tenants.
(c) Form Requirement. Each executed Estoppel Certificate must be in the Approved Form or otherwise in form and substance reasonably acceptable to Buyer and Buyer's lenders. Any material deviation from the Approved Form shall require Buyer's prior written approval.
The Estoppel Delivery Deadline under the PSA is May 15, 2024, which is seventy-five (75) days from the date of execution of the PSA on February 28, 2024.
We wish to emphasize that, pursuant to Section 8.2(d) of the PSA, the failure of Seller to deliver the required Estoppel Certificates by the Estoppel Delivery Deadline constitutes a failure of a condition precedent to Buyer's obligation to close the transaction. Accordingly, it is imperative that the estoppel distribution process commence without delay and that Seller employ diligent efforts to obtain executed Estoppel Certificates from all tenants—and, in particular, from each Major Tenant—well in advance of the deadline.
3. Form of Estoppel Certificate — Key Confirmations
The enclosed Approved Form of Estoppel Certificate (PSA Exhibit E) requires each tenant to confirm the following matters:
(i) The identity of the tenant and the applicable landlord entity (i.e., the corresponding Target Entity LLC);
(ii) The date of the lease and all amendments, modifications, supplements, assignments, and other documents comprising the lease, as applicable;
(iii) A description of the demised premises, including the street address, suite or unit number, and the total rentable square footage occupied by the tenant;
(iv) The current monthly and annual base rent payable by the tenant under the lease;
(v) The lease commencement date and the scheduled lease expiration date;
(vi) A description of any renewal options, expansion options, purchase options, rights of first offer, rights of first refusal, or other preferential rights held by the tenant under the lease;
(vii) The amount of any security deposit held by the landlord (for reference, aggregate security deposits held across the Portfolio total approximately $4,283,000);
(viii) A confirmation that the lease is in full force and effect and has not been modified, amended, supplemented, or assigned except as specifically disclosed in the Estoppel Certificate;
(ix) A confirmation that, to the tenant's knowledge, there are no defaults (or events that, with the passage of time, the giving of notice, or both, would constitute a default) by either the landlord or the tenant under the lease;
(x) A confirmation of any outstanding landlord obligations, including without limitation tenant improvement allowances or credits, free rent or rent abatement periods, unfulfilled construction or build-out obligations, and any other landlord work or contributions that remain unperformed or unpaid;
(xi) Identification of any offsets, claims, defenses, or counterclaims that the tenant may have against the landlord arising under or in connection with the lease;
(xii) The status of any common area maintenance ("CAM"), operating expense, tax, or insurance reconciliation for the most recently concluded calendar or fiscal year, including whether such reconciliation has been completed and whether any amounts remain due to or from the tenant;
(xiii) Any prepaid rent, including the amount and period covered, if applicable; and
(xiv) Such other matters as are set forth in the Approved Form.
Please note that the Approved Form requires that each Estoppel Certificate be completed in full and executed by a duly authorized officer of the tenant (or, in the case of a tenant that is a natural person, by such natural person). Partial or incomplete Estoppel Certificates will not satisfy the delivery requirements under the PSA.
Additionally, the PSA provides that each Estoppel Certificate must be dated no earlier than thirty (30) days prior to the scheduled closing date. Given the current anticipated closing date, we respectfully request that Seller monitor the dating of executed Estoppel Certificates as they are received and, to the extent any certificate is dated more than thirty days prior to closing, coordinate with the applicable tenant to obtain an updated or re-executed certificate.
4. Distribution Instructions to Seller
We respectfully request that Seller, acting through Argyle Property Services LLC ("Argyle"), the current property manager for the Portfolio (contact: Sean Kilpatrick, Portfolio Manager), distribute the Approved Form of Estoppel Certificate to each of the eighty-seven (87) tenants across all fourteen (14) properties as promptly as practicable following receipt of this letter.
To allow adequate time for tenant review, internal processing, and execution in advance of the May 15, 2024 Estoppel Delivery Deadline, we suggest that Seller cause the Estoppel Certificates to be delivered to tenants no later than March 11, 2024. We recommend that initial distribution be made via email to each tenant's designated lease notice contact (or, where available, the tenant's property contact), with a hard copy follow-up sent by certified mail or recognized overnight courier within one (1) business day thereafter. This dual-delivery approach will help ensure actual receipt by each tenant and create a clear record of the delivery date.
Each Estoppel Certificate should be accompanied by a cover letter from the applicable Target Entity, in its capacity as landlord, requesting the tenant's prompt attention and timely return of the executed Estoppel Certificate. For your convenience, we have enclosed a suggested form of such cover letter as Enclosure 3 to this letter. Seller and Argyle are, of course, free to modify the cover letter as appropriate, provided that the substance of the request and the return instructions remain consistent with the enclosed form.
We request that all executed Estoppel Certificates, as received, be returned to your offices at Blackridge Hayes LLP and simultaneously transmitted (by email in PDF format) to Calderwood & Harkness LLP for Buyer's review. The designated contact at our firm for receipt and review of executed Estoppel Certificates is:
Grace Nakamura Lead Associate Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, New York 10022
Email: gnakamura@calderwoodharkness.com
Telephone: (212) 554-7124
Please direct all executed Estoppel Certificates and related correspondence to Ms. Nakamura's attention in the first instance. She will coordinate Buyer's review and will promptly advise your office of any issues or concerns raised by any individual Estoppel Certificate.
5. Property and Target Entity List
For clarity and ease of reference, set forth below is a table listing each of the fourteen (14) properties comprising the Portfolio, together with the corresponding Target Entity (as landlord), property address, state, and number of leases at each property. Seller should use this table, in conjunction with the Rent Roll (PSA Exhibit H), to ensure that every tenant across the Portfolio receives the Approved Form of Estoppel Certificate.
As noted above, the Rent Roll attached as Exhibit H to the PSA (current as of December 31, 2023) identifies each tenant by name, suite or unit number, and ABR. We strongly recommend that Seller and Argyle cross-reference the Rent Roll against the foregoing table to confirm that every tenant at each property receives the Approved Form of Estoppel Certificate and that no tenant is inadvertently omitted from the distribution. In the event that any new leases have been executed or any tenancies have terminated since the date of the Rent Roll, we would appreciate prompt notification so that the distribution list and our tracking records can be updated accordingly.
6. Major Tenant Identification
As discussed in Section 2 above, the PSA requires the delivery of executed Estoppel Certificates from every Major Tenant—defined as tenants occupying 25,000 or more RSF across the Portfolio. There are no exceptions to this requirement, and the failure to deliver an executed Estoppel Certificate from even a single Major Tenant will constitute a failure to satisfy the estoppel condition precedent under Section 8.2(a)(ii) of the PSA.
For reference, set forth below are the five (5) largest tenants in the Portfolio by ABR, each of which qualifies as a Major Tenant:
These five tenants alone represent aggregate ABR of $33,446,000, or approximately 44.7% of Portfolio ABR. It is therefore essential that the executed Estoppel Certificates from each of these tenants—and from all other Major Tenants across the Portfolio—be obtained well in advance of the Estoppel Delivery Deadline.
We respectfully request that Seller prioritize the distribution of Estoppel Certificates to all Major Tenants and, where appropriate, that Argyle engage directly with the designated lease contacts or property-level contacts at each Major Tenant to facilitate prompt execution and return. In our experience, Major Tenants with larger legal departments may require additional time for internal review, and early engagement is critical to meeting the deadline.
7. Tracking and Status Updates
To ensure that the estoppel collection process proceeds on schedule and to allow the parties to identify and address any issues as they arise, we respectfully request that Seller's counsel at Blackridge Hayes LLP provide bi-weekly written status updates to Calderwood & Harkness LLP on the status of estoppel distribution and receipt. We propose that the first such status update be provided on or about March 18, 2024, and that subsequent updates follow every two weeks thereafter until all required Estoppel Certificates have been delivered.
Each status update should identify, at a minimum: (a) the tenants to whom Estoppel Certificates have been distributed; (b) the date of distribution to each tenant; (c) the tenants from whom executed Estoppel Certificates have been received; (d) the date of receipt of each executed Estoppel Certificate; and (e) any outstanding items, tenant inquiries, or issues requiring attention.
Calderwood & Harkness LLP will maintain a master estoppel tracking spreadsheet reflecting the status of each of the eighty-seven (87) Estoppel Certificates across the Portfolio. We will share this tracking spreadsheet with Blackridge Hayes LLP and update it on a rolling basis so that both parties' counsel have a coordinated and current view of the collection process.
In addition, we request prompt notification—by email to the undersigned—if any tenant refuses to execute the Approved Form of Estoppel Certificate or requests material modifications to the Approved Form. If a tenant proposes changes to the form, Seller should instruct the tenant to mark up the Approved Form with its proposed revisions and forward the marked-up form to both Blackridge Hayes LLP and Calderwood & Harkness LLP for review. Please be advised that, pursuant to the PSA, Buyer's prior written approval is required for any material deviation from the Approved Form (PSA Exhibit E), and Seller should not accept or agree to any such deviation without first obtaining Buyer's consent. Deviations of a typographical, formatting, or otherwise immaterial nature need not be submitted for Buyer's approval, but we would appreciate copies of all executed Estoppel Certificates, including those containing minor deviations, for our records and review.
8. Coordination with SNDA Process
We note that, in addition to the estoppel delivery obligations discussed herein, Section 8.2(b) of the PSA requires the delivery of Subordination, Non-Disturbance and Attornment Agreements ("SNDAs") to all Major Tenants (defined for SNDA purposes as tenants with ABR of $1,500,000 or more per annum) by the same May 15, 2024 deadline.
Buyer will separately transmit the form of SNDA (PSA Exhibit F) to Seller's counsel for distribution to the applicable Major Tenants. We anticipate providing the form SNDA under separate cover within the next several business days.
In the interest of efficiency and to minimize the burden on tenants—particularly Major Tenants who will be required to execute both an Estoppel Certificate and an SNDA—we recommend that Seller coordinate the distribution of the Estoppel Certificate and the SNDA to Major Tenants simultaneously, to the extent practicable. In our experience, presenting both documents to a tenant at the same time, with a single cover letter explaining the purpose of each, tends to minimize tenant fatigue and reduce the overall processing time. We are happy to work with your office to prepare a combined cover letter for this purpose once the form SNDA is finalized and transmitted.
9. Lender Requirements
As noted in Section 2 above, the PSA requires that each executed Estoppel Certificate be in form reasonably acceptable not only to Buyer but also to Buyer's lenders. Buyer's acquisition financing for the Portfolio is being provided by the following institutions:
(a) Pinnacle Federal Bank, N.A.;
(b) Veltrano Capital Lending Corp.; and
(c) Sycamore Life Insurance Company.
Each of these lenders may condition its consent to the change of control of the Target Entities and/or its agreement to fund on the receipt of tenant Estoppel Certificates in form satisfactory to such lender. The Approved Form of Estoppel Certificate (PSA Exhibit E) has been drafted to satisfy customary lender requirements for transactions of this nature and type. However, in the event that any lender raises specific requirements or requests modifications to the Approved Form—whether relating to additional certifications, specific lender-required language, or otherwise—Calderwood & Harkness LLP will promptly notify Blackridge Hayes LLP so that any necessary modifications can be incorporated into the distribution process as expeditiously as possible.
We do not anticipate material lender-driven changes to the Approved Form at this time, but we wanted to flag this issue for your awareness as the process gets underway.
10. Enclosures
Enclosed with this letter please find the following:
1. Enclosure 1: Form of Tenant Estoppel Certificate (PSA Exhibit E) — clean copy for distribution to tenants (see further description in Enclosure 1 below);
2. Enclosure 2: Rent Roll (PSA Exhibit H, as of December 31, 2023) — for reference in identifying all eighty-seven (87) tenants across the Portfolio; and
3. Enclosure 3: Suggested form of cover letter from each Target Entity (as landlord) to accompany the Estoppel Certificate upon distribution to tenants.
Please confirm receipt of each of the foregoing enclosures at your earliest convenience. In the event that any enclosure is missing or incomplete, please contact Ms. Nakamura immediately so that replacement copies can be provided.
11. Closing
We appreciate your and Seller's cooperation in advancing the estoppel collection process. As you know, the timely delivery of executed Estoppel Certificates is a critical component of the closing process, and we are committed to working collaboratively with your office and with Argyle to ensure that the PSA requirements are satisfied well in advance of the May 15, 2024 deadline.
Please confirm receipt of this letter and the enclosed materials at your earliest convenience. Should you have any questions or wish to discuss any aspect of the estoppel process, please do not hesitate to contact the undersigned or Douglas Fairchild, the responsible partner on this matter. Our contact information is as follows:
Douglas Fairchild — Responsible Partner Telephone: (212) 554-7050
Email: dfairchild@calderwoodharkness.com
Grace Nakamura — Lead Associate Telephone: (212) 554-7124
Email: gnakamura@calderwoodharkness.com
We look forward to your prompt response and to a smooth and efficient estoppel process.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Grace Nakamura Lead Associate
On behalf of Calderwood & Harkness LLP
Enclosures (3)
cc: (via email)
Douglas Fairchild, Esq. — Calderwood & Harkness LLP Angela Fontaine, Esq. — Calderwood & Harkness LLP Marcus Devereaux — EVP, Acquisitions, Fairwater Real Estate Investment Trust Camille Oduya, Esq. — In-House Real Estate Counsel, Fairwater Real Estate Investment Trust David Elgin Park, Esq. — General Counsel, Fairwater Real Estate Investment Trust
ENCLOSURE 1 Form of Tenant Estoppel Certificate (PSA Exhibit E)
The form of Tenant Estoppel Certificate enclosed herewith is a clean copy of Exhibit E to the Purchase and Sale Agreement dated February 28, 2024, by and among Fairwater Real Estate Investment Trust, as Buyer, and Greystone Meridian Partners Fund III, L.P., as Seller. This Approved Form has been agreed upon by Buyer and Seller and is the form to be distributed to all eighty-seven (87) tenants across the fourteen-property Portfolio for execution and return.
The Approved Form is attached hereto for Seller's convenience of distribution. Seller should reproduce the Approved Form in sufficient quantities for distribution to all tenants at each of the fourteen (14) properties comprising the Portfolio, with the applicable Target Entity name and property address pre-populated for each tenant, to the extent practicable.
No modifications to the Approved Form should be made by Seller or Argyle prior to distribution. If any tenant requests modifications to the Approved Form, Seller should follow the procedures set forth in Section 7 of the transmittal letter above.
[PSA Exhibit E — Form of Tenant Estoppel Certificate — attached separately.]
ENCLOSURE 2 Rent Roll Reference (PSA Exhibit H)
Enclosed herewith for reference is a copy of the Rent Roll attached as Exhibit H to the Purchase and Sale Agreement dated February 28, 2024 (the "Rent Roll"). The Rent Roll is current as of December 31, 2023, and identifies all eighty-seven (87) tenants across the fourteen-property Portfolio by tenant name, suite or unit number, rentable square footage, annual base rent, lease commencement date, lease expiration date, and other material lease terms.
Key Portfolio-level statistics reflected in the Rent Roll are as follows:
Seller should use the Rent Roll to cross-reference and verify that every tenant identified therein receives the Approved Form of Estoppel Certificate. Any discrepancies between the Rent Roll and the current tenant roster (e.g., new leases executed, tenancy expirations, lease assignments, or subleases entered into after December 31, 2023) should be promptly communicated to Calderwood & Harkness LLP so that the distribution list and tracking records can be updated.
[PSA Exhibit H — Rent Roll as of December 31, 2023 — attached separately.]
ENCLOSURE 3 Suggested Form of Landlord Cover Letter to Tenants
[On Letterhead of the Applicable Target Entity LLC]
[Date]
[Tenant Name] [Tenant Address] [City, State, ZIP]
Re: Request for Execution of Tenant Estoppel Certificate Lease dated [Lease Date], by and between [Target Entity LLC], as Landlord, and [Tenant Name], as Tenant Premises: [Suite/Unit Number], [Property Name], [Property Address]
Dear [Tenant Contact Name]:
We are writing to you in our capacity as landlord under the above-referenced lease (the "Lease"). In connection with a potential transaction involving the property at which your premises are located, we are requesting that you complete, execute, and return the enclosed Tenant Estoppel Certificate (the "Estoppel Certificate") at your earliest convenience.
The Estoppel Certificate is a routine document commonly used in commercial real estate transactions. It asks you to confirm certain basic facts about your Lease, including the current rent, the lease term, and the status of landlord and tenant obligations. The execution and return of the Estoppel Certificate does not alter, amend, or otherwise affect any of your rights or obligations under the Lease. Your rights under the Lease will continue in full force and effect in accordance with its terms.
We kindly request that you complete and return the executed Estoppel Certificate within fifteen (15) business days of your receipt of this letter. Please return the executed original by mail or overnight courier to the following address, and please also send a scanned copy by email to the contact listed below:
Argyle Property Services LLC
Attn: Sean Kilpatrick, Portfolio Manager
3300 Peachtree Road NE, Suite 2200 Atlanta, Georgia 30326
Email: skilpatrick@argylepropertyservices.com
Telephone: (404) 555-3800
If you have any questions regarding the enclosed Estoppel Certificate or require any assistance in completing it, please do not hesitate to contact Mr. Kilpatrick at the number or email address listed above. We appreciate your prompt attention to this matter and thank you in advance for your cooperation.
Very truly yours,
[TARGET ENTITY LLC]
By: ________
Name: ________
Title: Authorized Signatory
Date: ________
Enclosure: Form of Tenant Estoppel Certificate
This suggested form of cover letter is provided for Seller's convenience. Seller may modify the form as appropriate, provided that the substance of the request and the return instructions remain consistent with the foregoing.
| # | Property Name | Target Entity (Landlord) | Address | State | Number of Leases |
| 1 | Fairfield Logistics Center I | GMP Fairfield I LLC | 4200 Fairfield Industrial Blvd, Fairburn, GA 30213 | GA | 5 |
| 2 | Fairfield Logistics Center II | GMP Fairfield II LLC | 4300 Fairfield Industrial Blvd, Fairburn, GA 30213 | GA | 4 |
| 3 | Westlake Distribution Hub | GMP Westlake LLC | 11500 Westlake Parkway, Houston, TX 77082 | TX | 3 |
| 4 | Katy Freeway Logistics Park | GMP Katy LLC | 22600 Katy Freeway, Katy, TX 77449 | TX | 6 |
| 5 | Alliance Commerce Center | GMP Alliance LLC | 2800 Alliance Gateway Blvd, Fort Worth, TX 76177 | TX | 8 |
| 6 | Lakeland Crossings Industrial | GMP Lakeland LLC | 7100 Drane Field Road, Lakeland, FL 33811 | FL | 7 |
| 7 | Southport Logistics Park | GMP Southport LLC | 3200 Southport Connector Road, Jacksonville, FL 32218 | FL | 4 |
| 8 | Murfreesboro Distribution Center | GMP Murfreesboro LLC | 1600 Joe B. Jackson Parkway, Murfreesboro, TN 37127 | TN | 5 |
| 9 | Buckhead Place Office Tower | GMP Buckhead LLC | 3380 Peachtree Road NE, Atlanta, GA 30326 | GA | 14 |
| 10 | SouthPark Corporate Center | GMP SouthPark LLC | 6200 Fairview Road, Charlotte, NC 28210 | NC | 11 |
| 11 | Cool Springs Office Park | GMP Cool Springs LLC | 5000 Virginia Way, Brentwood, TN 37027 | TN | 8 |
| 12 | Brickell Bay Office Building | GMP Brickell LLC | 1450 Brickell Avenue, Miami, FL 33131 | FL | 6 |
| 13 | Peachtree Corners Logistics Center | GMP Peachtree LLC | 5900 Peachtree Industrial Blvd, Peachtree Corners, GA 30071 | GA | 3 |
| 14 | Mount Juliet Commerce Park | GMP Mount Juliet LLC | 400 South Mount Juliet Road, Mount Juliet, TN 37122 | TN | 3 |
| Total | 87 | ||||
| Rank | Tenant | RSF | ABR | Property | |
| 1 | Cascade Supply Chain Solutions Inc. | 624,000 | $8,736,000 | Westlake Distribution Hub | |
| 2 | Zynvaro Distribution Holdings LLC | 538,000 | $7,532,000 | Katy Freeway Logistics Park | |
| 3 | Thornton-Whitaker Pharmaceuticals Corp. | 412,000 | $6,180,000 | Fairfield Logistics Center I | |
| 4 | Birchwood Technology Group Inc. | 218,000 | $5,668,000 | SouthPark Corporate Center | |
| 5 | Atlas Freight Logistics Corp. | 410,000 | $5,330,000 | Southport Logistics Park | |
| Metric | Value | ||||
| Total Number of Leases | 87 | ||||
| Total Portfolio RSF | 5,224,000 SF |
| Aggregate Annual In-Place Base Rent (ABR) | $74,800,000 |
| Weighted-Average Portfolio Occupancy | 93.2% |
| Logistics Portfolio Occupancy | 96.1% |
| Office Portfolio Occupancy | 82.7% |