CALDERWOOD & HARKNESS LLP Attorneys at Law
450 Park Avenue, 28th Floor
www.calderwoodharkness.com
March 8, 2024
VIA Sundial Data Systems AND EMAIL
Claire Wynn, Esq., Partner Partridge Wynn & Slater LLP 100 Constitution Plaza, Suite 700 Hartford, CT 06103
Re: Consent to Change of Control — Loans 3-A and 3-B Borrowers: GMP Peachtree LLC and GMP Mount Juliet LLC Lender: Sycamore Life Insurance Company Note Purchase Agreement dated November 22, 2019, as amended
Dear Ms. Wynn:
I. Introduction and Purpose
This firm represents Fairwater Real Estate Investment Trust, a Maryland real estate investment trust ("Fairwater" or "Buyer"), with its principal offices located at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044. Fairwater is a publicly traded real estate investment trust listed on the New York Stock Exchange under the ticker symbol "FREIT," with an aggregate market capitalization of approximately $4.8 billion as of the fourth quarter of 2023.
We are writing on behalf of Fairwater to formally request the consent of Sycamore Life Insurance Company ("Sycamore Life" or "Lender"), a Connecticut stock life insurance company, with offices at 100 Constitution Plaza, Hartford, Connecticut 06103, to a change of control of the borrower entities under Loans 3-A and 3-B (each as more fully described in Section III below), as required pursuant to the Note Purchase Agreement dated November 22, 2019, as amended (the "Loan Agreement"), by and between Sycamore Life and the borrower entities identified herein. We understand that Graham Hilliard, Vice President, Mortgage Investments, is the Lender's loan officer contact for the subject loans, and we respectfully request that you coordinate with Mr. Hilliard as appropriate in connection with this consent request.
The purpose of this letter is to: (a) describe the transaction giving rise to the change of control; (b) identify the loans for which consent is sought; (c) set forth the nature of the consent requested; (d) provide information regarding the proposed replacement guarantor; (e) present the financial qualifications of the Buyer; and (f) outline the timeline within which consent is required. This letter is accompanied by a comprehensive set of supporting documents, which are enumerated in Section IX below.
II. Description of the Transaction
Fairwater has entered into a Purchase and Sale Agreement dated February 28, 2024 (the "PSA") with Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership ("Seller" or "GMP Fund III"), whose general partner is Greystone Meridian Capital LLC, a Delaware limited liability company. Seller's principal office is located at 3300 Peachtree Road NE, Suite 2200, Atlanta, Georgia 30326, and Seller's registered agent address is Pemberton Industries, 1209 Orange Street, Wilmington, Delaware 19801. The managing partners of Seller are Victor Lansdell and Elise Rathborne.
Pursuant to the PSA, Fairwater will acquire, through an entity-level transaction, one hundred percent (100%) of the membership interests in fourteen (14) single-purpose Delaware limited liability companies, each of which is wholly owned, directly or indirectly, by GMP Fund III and each of which owns a single real property asset within the Seller's Sun Belt logistics and office portfolio (collectively, the "Portfolio"). The properties included in the Portfolio are located across the southeastern United States and represent a diversified mix of logistics, industrial, and suburban office assets.
The key financial terms of the transaction are as follows:
• Aggregate Purchase Price: $1,100,000,000
• Total Assumed Mortgage Debt (across three lenders): $612,000,000
• Cash Equity at Closing: $488,000,000
The transaction is structured as a transfer of membership interests in each of the fourteen borrower entities rather than as a direct conveyance of real property. Accordingly, the transfer of the membership interests constitutes a "change of control" under each existing mortgage loan agreement encumbering the properties within the Portfolio, including the Loan Agreement. As such, the consent of each lender — including Sycamore Life — is a condition to the closing of the transaction under the PSA.
The scheduled closing date for the transaction is May 31, 2024 (the "Closing Date").
III. Identification of the Sycamore Loans
The two loans originated by Sycamore Life that are subject to this consent request are as follows:
A. Loan 3-A
Borrower: GMP Peachtree LLC, a Delaware limited liability company (EIN: 84-2741063)
Property: Peachtree Corners Logistics Center, 5900 Peachtree Industrial Blvd, Peachtree Corners, Georgia 30071
Property Type: Logistics / warehouse facility; approximately 345,000 rentable square feet; constructed in 2020
Security: The loan is secured by a first-priority mortgage lien on the property, together with an assignment of rents and leases and other customary collateral documents.
B. Loan 3-B
Borrower: GMP Mount Juliet LLC, a Delaware limited liability company (EIN: 84-2741070)
Property: Mount Juliet Commerce Park, 400 South Mount Juliet Road, Mount Juliet, Tennessee 37122
Property Type: Logistics / warehouse facility; approximately 298,000 rentable square feet; constructed in 2021
Security: The loan is secured by a first-priority mortgage lien on the property, together with an assignment of rents and leases and other customary collateral documents.
C. Summary of Key Loan Terms
The following terms apply to Loans 3-A and 3-B collectively under the Loan Agreement:
Both loans are current as of the date of this letter, and no events of default or known conditions that, with notice or the passage of time, would constitute events of default, exist under the Loan Agreement, other than the contemplated change of control for which consent is hereby sought.
IV. Nature of Consent Requested
We respectfully request that Sycamore Life provide its written consent to the following:
(a) The transfer of one hundred percent (100%) of the membership interests in GMP Peachtree LLC and GMP Mount Juliet LLC from GMP Fund III (and its direct and indirect subsidiaries, as applicable) to Fairwater Real Estate Investment Trust (and/or one or more wholly owned subsidiaries of Fairwater designated by Fairwater prior to closing), such transfer constituting a "change of control" as defined in the Loan Agreement;
(b) A confirmation by Sycamore Life that such transfer, upon the satisfaction of any conditions to consent set forth in the Loan Agreement and in Sycamore Life's consent letter, shall not constitute an event of default under the Loan Agreement or any of the related loan documents, and that Sycamore Life irrevocably waives any right to accelerate the loans, exercise remedies, or impose penalties in connection with or as a result of such transfer;
(c) The assumption by Fairwater of all obligations of the borrower entities under the Loan Agreement and all related loan documents, in accordance with the terms of the Assumption Agreement to be executed at closing; and
(d) The replacement of the existing guarantor (GMP Fund III) with Fairwater Real Estate Investment Trust as the replacement guarantor under a new carve-out guaranty, as described in Section V below.
Enclosed with this letter for Sycamore Life's review and consideration is the Form of Lender Consent Letter, which is attached to the PSA as Exhibit R and which the parties have proposed as the template for the consent to be delivered by Sycamore Life. We invite Sycamore Life and its counsel to review this form and to propose any revisions or modifications that Sycamore Life may require. We are prepared to negotiate the final form of the consent letter in good faith and on an expedited basis.
V. Replacement Guaranty
In connection with the proposed change of control, and as a condition to closing under the PSA, Fairwater Real Estate Investment Trust will execute and deliver to Sycamore Life a replacement carve-out guaranty (the "Replacement Guaranty") in favor of Sycamore Life, which will replace in its entirety the existing carve-out guaranty provided by GMP Fund III. The form of the Replacement Guaranty is attached to the PSA as Exhibit S and is enclosed herewith in draft form for Sycamore Life's review.
The Replacement Guaranty will contain financial covenants applicable to the replacement guarantor, which are consistent with market standards for guaranties of this type. The key financial covenants are as follows:
• Minimum Tangible Net Worth: $500,000,000
• Minimum Liquid Assets: $50,000,000
Fairwater represents that it currently satisfies, and expects to continue to satisfy throughout the term of the Loan Agreement, each of the foregoing financial covenants. Fairwater's audited financial statements and SEC filings, which are enclosed herewith, substantiate Fairwater's compliance with these covenants. We believe that the financial strength and creditworthiness of Fairwater, as detailed in Section VI below, will provide Sycamore Life with a guarantor of substantially equal or greater financial capacity than the existing guarantor.
As with the Form of Lender Consent Letter, we invite Sycamore Life and its counsel to review the draft Replacement Guaranty and to propose any revisions or modifications that Sycamore Life may deem appropriate.
VI. Buyer's Financial Profile and Qualifications
Fairwater Real Estate Investment Trust is a Maryland real estate investment trust that has been publicly traded on the New York Stock Exchange under the ticker symbol "FREIT" since its initial public offering in 2009. As noted above, Fairwater's aggregate market capitalization was approximately $4.8 billion as of the fourth quarter of 2023.
The senior leadership of Fairwater includes:
• Chief Executive Officer: Jonathan R. Whitmore
• Chief Financial Officer: Patricia Sung-Calloway
Fairwater's current portfolio comprises sixty-two (62) logistics, industrial, and suburban office properties located across eleven (11) states, representing approximately 18.4 million rentable square feet with a weighted-average remaining lease term of 6.2 years. Fairwater's portfolio is diversified by geography, tenant, and property type, and its tenant base includes a mix of investment-grade and creditworthy tenants across the logistics, e-commerce, light manufacturing, and professional services sectors.
Fairwater maintains an unsecured revolving credit facility in the amount of $750,000,000, with Aldgate National Bank, N.A. serving as administrative agent, pursuant to a credit agreement dated August 14, 2022. The applicable margin under the revolving credit facility is the Secured Overnight Financing Rate (SOFR) plus 130 basis points. As of the date hereof, Fairwater has substantial available capacity under this facility.
Fairwater anticipates funding the cash equity component of the transaction — approximately $488,000,000 — primarily through a draw on the revolving credit facility, supplemented as necessary by other available corporate funds. Fairwater's balance sheet, capital structure, and access to liquidity are well suited to support the acquisition and the ongoing debt service obligations under the Sycamore loans.
We enclose herewith Fairwater's most recent audited financial statements, its most recent Annual Report on Form 10-K filed with the United States Securities and Exchange Commission, and its most recent Quarterly Report on Form 10-Q, together with any other financial information reasonably required under the Loan Agreement for Sycamore Life to evaluate the incoming borrower, guarantor, and controlling person. Should Sycamore Life require any additional financial information, certifications, or supporting documentation in connection with its underwriting review, we will promptly provide the same upon request.
VII. Consent Fee
In accordance with the terms of the Loan Agreement, a consent fee is payable to Sycamore Life in connection with the Lender's processing and granting of consent to the proposed change of control. The consent fee is calculated as follows:
Consent Fee Rate: 0.125% of the outstanding principal balance of the loans
Outstanding Principal Balance: $48,100,000
Consent Fee Calculation: $48,100,000 × 0.00125 = $60,125.00
Pursuant to Section 12.4 of the PSA, consent fees payable to existing lenders in connection with the change of control are to be borne equally (50/50) by Buyer and Seller. Accordingly, Buyer's share of the consent fee is $30,062.50 and Seller's share of the consent fee is $30,062.50.
Fairwater is prepared to cause payment of the full consent fee to Sycamore Life upon or prior to the execution of the consent letter by Sycamore Life. We respectfully request that you provide us with wire transfer instructions for the payment of the consent fee at your earliest convenience so that we may arrange for timely remittance.
VIII. Lender Consent Deadline and Timeline
Under the terms of the PSA, the deadline for receipt of all required lender consents, including the consent of Sycamore Life, is May 24, 2024 (the "Lender Consent Deadline"). The scheduled Closing Date for the transaction is May 31, 2024. Receipt of Sycamore Life's consent to the change of control is an express condition to closing under the PSA, and the failure to obtain such consent on or before the Lender Consent Deadline could result in a delay or termination of the transaction.
Given the significance of Sycamore Life's consent to the successful closing of this transaction, we respectfully request that Sycamore Life and its counsel process this consent request on an expedited basis. We understand that Sycamore Life will need adequate time to review the enclosed materials, conduct its own underwriting analysis, and negotiate the final form of the consent documents, and we are committed to facilitating that process in every way possible.
To that end, Calderwood & Harkness is available at any time to address questions from Sycamore Life or its counsel, to provide additional documentation or information as may be requested, and to participate in telephone conferences or in-person meetings to facilitate the timely review and approval of this consent request. We would welcome the opportunity to schedule an introductory call with Mr. Hilliard and your team at Partridge Wynn & Slater to discuss the consent process and timeline at your convenience.
IX. Summary of Enclosures
The following documents are enclosed with this letter for Sycamore Life's review in connection with this consent request:
1. Executed Purchase and Sale Agreement dated February 28, 2024 (redacted as appropriate for confidentiality)
2. Draft Form of Lender Consent Letter (PSA Exhibit R)
3. Draft Replacement Carve-Out Guaranty (PSA Exhibit S)
4. Draft Assumption Agreement for the Sycamore Loans
5. Fairwater REIT organizational documents, including the Declaration of Trust, bylaws, and certificate of good standing from the State of Maryland
6. Board of Trustees resolutions authorizing the acquisition and the assumption of the Sycamore loans
7. Fairwater REIT audited financial statements for the most recent fiscal year, together with the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission
8. Certificates of formation and certificates of good standing for GMP Peachtree LLC and GMP Mount Juliet LLC, each issued by the Secretary of State of the State of Delaware
9. Current rent rolls for Peachtree Corners Logistics Center and Mount Juliet Commerce Park
10. Certificates of insurance evidencing current property and general liability coverage for each of the subject properties
Should Sycamore Life require any additional documents or information beyond the foregoing, we will endeavor to provide the same promptly upon request.
X. Contact Information and Coordination
For your convenience, the primary contacts in connection with this consent request are as follows:
Calderwood & Harkness LLP (Buyer's Counsel):
| Douglas Fairchild, Partner, Real Estate 450 Park Avenue, 28th Floor New York, NY 10022 Tel: (212) 844-7112 | Email: dfairchild@calderwoodharkness.com |
| Grace Nakamura, Lead Associate, Real Estate 450 Park Avenue, 28th Floor New York, NY 10022 Tel: (212) 844-7245 | Email: gnakamura@calderwoodharkness.com |
| Rafael Dominguez, Associate, Real Estate 1700 K Street NW, Suite 900 Washington, DC 20006 Tel: (202) 631-5538 | Email: rdominguez@calderwoodharkness.com |
Fairwater Real Estate Investment Trust (Buyer — In-House):
David Elgin Park, General Counsel Camille Oduya, In-House Real Estate Counsel Marcus Devereaux, Executive Vice President, Acquisitions 7200 Chesapeake Parkway, Suite 1100 Columbia, MD 21044
Blackridge Hayes LLP (Seller's Counsel):
Nathaniel Pryce, Lead Partner 1285 Avenue of the Americas, 34th Floor New York, NY 10019
We note that, in addition to this consent request, Calderwood & Harkness LLP is simultaneously submitting consent requests to the other two mortgage lenders in the Portfolio: Pinnacle Federal Bank, N.A. (through Whitfield & Archer LLP, counsel to Pinnacle Federal) and Veltrano Capital Lending Corp. (through Cranford McCabe LLP, counsel to Veltrano Capital). We will coordinate with all parties as necessary to ensure parallel processing of the consent requests across all three lenders, and we are happy to facilitate communication among the lenders' respective counsel to the extent that doing so would assist in the efficient administration of the consent process.
Our matter number for this engagement is 1036-00004, which we kindly ask you to reference in all correspondence.
We sincerely appreciate Sycamore Life's prompt attention to this consent request and look forward to working with you and your colleagues at Partridge Wynn & Slater to bring this matter to a timely and successful conclusion. Should you require any additional information, documentation, or clarification at any stage of your review, please do not hesitate to contact us.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Fairchild Partner, Real Estate Tel: (212) 844-7112
Email: dfairchild@calderwoodharkness.com
cc:
Marcus Devereaux, Executive Vice President, Acquisitions, Fairwater Real Estate Investment Trust David Elgin Park, General Counsel, Fairwater Real Estate Investment Trust Camille Oduya, In-House Real Estate Counsel, Fairwater Real Estate Investment Trust Nathaniel Pryce, Partner, Blackridge Hayes LLP (Seller's counsel) Graham Hilliard, Vice President, Mortgage Investments, Sycamore Life Insurance Company Grace Nakamura, Associate, Calderwood & Harkness LLP Rafael Dominguez, Associate, Calderwood & Harkness LLP
Enclosures (as described above)
| Term | Detail |
| Aggregate Outstanding Principal Balance (as of February 28, 2024) | $48,100,000 |
| Interest Rate | Fixed 3.95% per annum |
| Maturity Date | December 1, 2030 |
| Governing Loan Document | Note Purchase Agreement dated November 22, 2019, as amended |