MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Douglas Fairchild, Responsible Partner; Angela Fontaine, Billing Partner
FROM: Grace Nakamura, Lead Associate; Rafael Dominguez, Working Associate
DATE: November 10, 2023
RE: Local Counsel Engagements — Fairwater REIT / GMP Fund III Portfolio Acquisition (C&H Matter No. 1036-00004)
CLIENT: Fairwater Real Estate Investment Trust
MATTER: Acquisition of 14-property Sun Belt logistics and office portfolio from Greystone Meridian Partners Fund III, L.P. — $1,100,000,000 purchase price
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I. Introduction and Purpose
This memorandum outlines the scope, responsibilities, opinion requirements, fee arrangements, and coordination protocols for local counsel engagements across five states in connection with Fairwater Real Estate Investment Trust's ("Fairwater REIT" or the "Buyer") entity-level acquisition of 100% of the membership interests in 14 single-purpose Delaware limited liability companies (collectively, the "Target Entities") from Greystone Meridian Partners Fund III, L.P. ("GMP Fund III" or the "Seller"). The aggregate purchase price for the portfolio is $1,100,000,000, as set forth in the Purchase and Sale Agreement dated October 2, 2023, as amended (the "PSA").
The transaction is structured as an entity-level purchase — that is, the Buyer will acquire all of the issued and outstanding membership interests in each of the 14 Target Entities, rather than acquiring fee simple title to the underlying real property directly. Although each of the Target Entities is organized as a limited liability company under the laws of the State of Delaware, local counsel is required in each state where the underlying real property is located for the following reasons:
(a) Real property law matters, including title, recording, and transfer tax issues arising under the laws of the state in which each property is situated;
(b) Zoning and land use compliance confirmations, including obtaining zoning confirmation letters from each applicable local municipality;
(c) State-specific landlord-tenant law issues affecting the 87 commercial leases currently encumbering the portfolio properties, including assignment and assumption issues, estoppel requirements, security deposit handling, and subordination, non-disturbance, and attornment agreement ("SNDA") enforceability;
(d) Controlling-interest transfer tax filings and compliance, as several of the jurisdictions in which the portfolio properties are located impose transfer taxes on changes of controlling interests in entities that hold real property, notwithstanding the fact that no deed or other conveyance instrument is being recorded;
(e) Foreign qualification filings for the Target Entities, which, as Delaware-organized entities doing business in states other than Delaware, are required to maintain foreign qualification certificates in their respective states of property location; and
(f) Closing opinions addressed to Fairwater REIT and, as applicable, to the three existing mortgage lenders whose loans will remain in place following the closing: Pinnacle Federal Bank, N.A. ("Pinnacle"), Veltrano Capital Lending Corp. ("Veltrano"), and Sycamore Life Insurance Company ("Sycamore").
Local counsel engagements span five jurisdictions: Texas (three properties), Georgia (four properties), North Carolina (one property), Tennessee (three properties), and Florida (three properties). This memorandum is intended to serve as a comprehensive reference for the C&H deal team, billing personnel, and the responsible partner in connection with the management and oversight of these engagements.
II. Portfolio Summary by Jurisdiction
The following subsections provide a property-by-property summary organized by jurisdiction. For each property, we identify the street address, the applicable Target Entity (including employer identification number), and the applicable loan relationship. Additional notes regarding transfer tax exposure, environmental conditions, and property condition assessment ("PCA") findings are included where relevant.
A. Texas — 3 Properties
All three Texas properties are logistics-type assets. Each is secured by an individual promissory note issued under the Master Loan Agreement between GMP Fund III and Pinnacle Federal Bank, N.A. dated September 15, 2020 (the "Pinnacle Master Loan Agreement"). The individual notes for these properties are designated Loans 1-C, 1-D, and 1-E, respectively, under the Pinnacle Master Loan Agreement.
Texas does not impose a state-level transfer tax on conveyances of real property or on transfers of controlling interests in entities holding real property. Accordingly, the transfer tax exposure for the Texas properties is zero, and only nominal local recording fees will be applicable. This significantly reduces the complexity of the Texas engagement relative to the other four jurisdictions.
With respect to environmental matters, the Phase I Environmental Site Assessment for the Westlake Distribution Hub, prepared by Trident Environmental Group LLC and dated August 12, 2023, identified de minimis recognized environmental conditions ("RECs") associated with a former underground storage tank on a neighboring parcel. These RECs have been characterized as controlled, and no further action is recommended at this time. The Phase I reports for Katy Freeway Logistics Park and Alliance Commerce Center did not identify any RECs.
B. Georgia — 4 Properties
Georgia represents the largest single-state concentration within the portfolio by property count. The four Georgia properties include a mix of logistics and office assets and, notably, involve three distinct lender relationships: the two Fairfield properties are secured under the Pinnacle Master Loan Agreement (Loans 1-A and 1-B), the Buckhead Place Office Tower is secured by a loan from Veltrano Capital Lending Corp. (Loan 2-A), and the Peachtree Corners Logistics Center is secured by a loan from Sycamore Life Insurance Company (Loan 3-A).
Georgia imposes a controlling-interest transfer tax on transfers of controlling interests in entities holding Georgia real property. Based on preliminary analysis coordinated with Sylvia Hartwell (C&H Tax) and Naomi Ikeda (Ashford Prewitt LLP, CPA), the estimated controlling-interest transfer tax exposure for the four Georgia properties is approximately $1,250,000. Under the PSA, this amount is to be split equally between the Buyer and the Seller (i.e., approximately $625,000 each).
With respect to property condition, the Property Condition Assessment for Buckhead Place Office Tower, prepared by Trident Environmental Group LLC and dated September 5, 2023, identified approximately $890,000 in estimated immediate repair costs, principally related to HVAC system replacements, roof membrane repairs, and elevator modernization. This amount is expected to be addressed through the PCA escrow mechanism set forth in Section 7.4(b) of the PSA.
C. North Carolina — 1 Property
North Carolina contains a single portfolio property — the SouthPark Corporate Center, a Class A office asset located in the SouthPark submarket of Charlotte, Mecklenburg County. The property is secured by a loan from Veltrano Capital Lending Corp. (Loan 2-B under the Veltrano Master Loan Agreement).
North Carolina imposes an excise tax on transfers of controlling interests in entities holding North Carolina real property. The estimated excise tax exposure for the SouthPark Corporate Center is approximately $180,000, which, pursuant to the PSA, is to be allocated equally between Buyer and Seller (approximately $90,000 each).
The Property Condition Assessment for SouthPark Corporate Center identified approximately $250,000 in estimated immediate repair costs, primarily related to parking structure waterproofing and common area finish upgrades. As with the Buckhead property, these costs are expected to be addressed through the PCA escrow mechanism under the PSA.
Although this is the smallest engagement by property count, the North Carolina excise tax analysis and filing requirements, together with the Veltrano lender consent process, will require substantive local counsel involvement.
D. Tennessee — 3 Properties
The Tennessee portfolio includes a mix of logistics and office properties spread across three counties in the greater Nashville metropolitan area. As with Georgia, all three lender relationships are represented: Murfreesboro Distribution Center is secured under the Pinnacle Master Loan Agreement (Loan 1-H), Cool Springs Office Park is secured by a Veltrano Capital loan (Loan 2-C), and Mount Juliet Commerce Park is secured by a Sycamore Life Insurance loan (Loan 3-B).
Tennessee imposes a transfer tax on controlling-interest transfers involving entities holding Tennessee real property. The estimated transfer tax exposure for the three Tennessee properties is approximately $740,000, to be shared equally by Buyer and Seller (approximately $370,000 each) under the PSA.
The Property Condition Assessment for Cool Springs Office Park identified approximately $620,000 in estimated immediate repair costs, primarily attributable to curtain wall sealant replacement, fire suppression system upgrades, and ADA-compliance improvements in common areas. These costs represent the second-largest PCA exposure in the portfolio (after Buckhead Place Office Tower in Georgia) and will be addressed through the PSA escrow mechanism.
E. Florida — 3 Properties
Florida presents the highest single-state transfer tax exposure in the portfolio. The three Florida properties include two logistics assets (Lakeland and Jacksonville) and one Class A office building (Miami). Two lender relationships are implicated: the two logistics properties are secured under the Pinnacle Master Loan Agreement (Loans 1-F and 1-G), and the Brickell Bay Office Building is secured by a Veltrano Capital loan (Loan 2-D).
Florida imposes documentary stamp tax on deemed consideration for controlling-interest transfers. Based on preliminary analysis, the estimated documentary stamp tax exposure for the three Florida properties is approximately $1,680,000 — the highest single-state exposure in the portfolio. Under the PSA, this amount is to be split equally between Buyer and Seller (approximately $840,000 each). Given the magnitude of this exposure, the Florida transfer tax analysis will require particularly careful coordination between Palmetto Strauss PA and the C&H Tax team.
With respect to environmental and property condition matters, the Phase I Environmental Site Assessment for Lakeland Crossings Industrial identified de minimis RECs associated with historical agricultural use of a portion of the site. These RECs have been characterized as controlled, and no further action is recommended. The Property Condition Assessment for Lakeland Crossings Industrial also identified approximately $380,000 in estimated immediate repair costs, principally related to loading dock leveler replacements, parking lot resurfacing, and stormwater management system repairs.
III. Local Counsel Firms — Identification and Contact Information
After careful evaluation of firm capabilities, geographic coverage, subject-matter expertise, and prior working relationships, C&H has selected local counsel firms in each of the five jurisdictions. Set forth below is the identification and contact information for each firm, together with notes regarding the basis for selection.
A. Texas — Breckenridge Osgood LLP
Firm: Breckenridge Osgood LLP Address: 717 Texas Avenue, Suite 2600, Houston, Texas 77002 Telephone: (713) 555-4200 Lead Partner: James Breckenridge (jbreckenridge@breckenridgeosgood.com) Supporting Associate: Morgan Finch (mfinch@breckenridgeosgood.com) Short Name: "BO"
Breckenridge Osgood LLP was selected on the basis of its deep Texas commercial real estate and title practice, which includes significant experience in representing institutional buyers and sellers of logistics and industrial properties throughout the Houston and Dallas-Fort Worth metropolitan areas. C&H has previously engaged Breckenridge Osgood on two matters involving Texas real property acquisitions in 2021 and 2022, both of which were completed satisfactorily and on budget. The firm maintains offices in the same building as Whitfield & Archer LLP, counsel to Pinnacle Federal Bank, N.A. (717 Texas Avenue, Suite 2500, Houston), which is expected to facilitate efficient coordination on lender consent matters. Additionally, Breckenridge Osgood's offices are in close proximity to Pinnacle Federal Bank's headquarters at 600 Travis Street, Suite 4400, Houston, Texas. James Breckenridge is a recognized authority on Texas real property law and has served as chair of the Real Property, Probate, and Trust Law Section of the State Bar of Texas.
B. Georgia — Talmadge Beaumont LLP
Firm: Talmadge Beaumont LLP Address: 1180 Peachtree Street NE, Suite 1900, Atlanta, Georgia 30309 Telephone: (404) 555-7800 Lead Partner: Catherine Beaumont (cbeaumont@talmadgebeaumont.com) Supporting Associate: Jonathan Ware (jware@talmadgebeaumont.com) Short Name: "TB"
Talmadge Beaumont LLP was selected for its extensive Georgia real property and transfer tax expertise, as well as its substantial experience with institutional commercial real estate transactions in the Atlanta metropolitan area. Catherine Beaumont has handled numerous controlling-interest transfer tax filings and is recognized as one of the leading practitioners in Georgia transfer tax matters. The firm's offices are conveniently situated in proximity to the Commonwealth National Title Insurance Company escrow office at 191 Peachtree Street NE, Suite 800, Atlanta, which will serve as the title and escrow agent for all Georgia closings. Additionally, Talmadge Beaumont's offices are located near the Seller's principal offices at 3300 Peachtree Road NE, Suite 2200, Atlanta. C&H has not previously engaged Talmadge Beaumont but received strong referrals from two other Am Law 100 firms with whom Talmadge Beaumont has collaborated on Georgia real estate transactions.
C. North Carolina — Haversham Cole PLLC
Firm: Haversham Cole PLLC Address: 301 South College Street, Suite 1400, Charlotte, North Carolina 28202 Telephone: (704) 555-3100 Lead Partner: marshall Haversham (mhaversham@havershamcole.com) Supporting Associate: Adrienne Polk (apolk@havershamcole.com) Short Name: "HC"
Haversham Cole PLLC was selected for its North Carolina real estate and excise tax expertise. The firm has a well-established commercial real estate practice in the Charlotte area and is familiar with Mecklenburg County filing procedures. Marshall Haversham has specific experience with North Carolina controlling-interest excise tax filings and has published on the topic in the North Carolina Bar Association Real Property Section newsletter. The firm's Charlotte offices are situated in the central business district, approximately four miles from the SouthPark Corporate Center property at 6200 Fairview Road, Charlotte. C&H has not previously engaged Haversham Cole but was introduced to the firm through Kenneth Stanhope of Commonwealth National Title Insurance Company, who has worked with the firm on prior transactions.
D. Tennessee — Ellsworth Ridley LLP
Firm: Ellsworth Ridley LLP Address: 424 Church Street, Suite 1500, Nashville, Tennessee 37219 Telephone: (615) 555-6400 Lead Partner: Diane Ellsworth (dellsworth@ellsworthridley.com) Supporting Associate: Patrick Connolly (pconnolly@ellsworthridley.com) Short Name: "ER"
Ellsworth Ridley LLP was selected for its Tennessee real property and transfer tax expertise. The firm has a prominent Nashville-based commercial real estate practice and covers the greater Nashville metropolitan area, including the Brentwood, Murfreesboro, and Mount Juliet submarkets where the three Tennessee portfolio properties are located. Diane Ellsworth has extensive experience with Tennessee controlling-interest transfer tax matters, including filings in Rutherford, Williamson, and Wilson Counties. C&H has previously engaged Ellsworth Ridley on one matter involving a Tennessee industrial property acquisition in 2020, which was completed to our satisfaction.
E. Florida — Palmetto Strauss PA
Firm: Palmetto Strauss PA Address: 100 Southeast Second Street, Suite 2800, Miami, Florida 33131 Telephone: (305) 555-9200 Lead Partner: Roberto Strauss (rstrauss@palmettostrauss.com) Supporting Associates: Elena Vasquez (evasquez@palmettostrauss.com); David Nguyen (dnguyen@palmettostrauss.com) Short Name: "PS"
Palmetto Strauss PA was selected for its Florida real estate, documentary stamp tax, and landlord-tenant expertise. The firm has a broad statewide real estate practice with particular depth in documentary stamp tax analysis for controlling-interest transfers, which is critical given that Florida presents the highest single-state transfer tax exposure in this portfolio (estimated at approximately $1,680,000). The firm's Miami offices are located in the same building as Cranford McCabe LLP, counsel to Veltrano Capital Lending Corp. (100 Southeast Second Street, Suite 3000, Miami), and are in close proximity to Veltrano Capital's offices at 200 South Biscayne Boulevard, Suite 3100, Miami. Palmetto Strauss maintains the capacity to cover all three Florida property locations: Miami (Miami-Dade County), Jacksonville (Duval County), and Lakeland (Polk County). Roberto Strauss has been recognized by Larkspur Corporation for Florida real property law. C&H has previously engaged Palmetto Strauss on three prior Florida real estate transactions and has consistently found the firm's work to be of high quality.
IV. Scope of Local Counsel Engagements
A. Common Scope — All Five Jurisdictions
Each of the five local counsel firms will be engaged to perform the following categories of work in connection with the properties located in their respective jurisdictions. The common scope elements described below are intended to provide a baseline of responsibilities. State-specific scope variations are addressed in Section IV.B below.
1. Title and Survey Review Assistance. Each local counsel firm will assist C&H with the review of title commitments and exception documents for state-specific matters affecting properties in their jurisdiction. This includes, but is not limited to:
• Reviewing title commitments issued by Commonwealth National Title Insurance Company ("Commonwealth") and the underlying exception documents (including recorded easements, restrictive covenants, liens, judgments, and other matters of record) for compliance with state-specific real property law requirements.
• Coordinating directly with Commonwealth's designated contacts — Kenneth Stanhope, Senior Vice President and Title Officer, and Virginia Moorehead, Assistant Vice President and National Counsel — on state-specific endorsement requirements, including any endorsements that are required or customary in the applicable jurisdiction but that may not be available in standard ALTA form.
• Reviewing the ALTA/NSPS land title surveys prepared by Meridian Land Surveying, Inc. (Daniel Caulfield, PLS, PE, Project Manager) for state-specific survey issues, including setback compliance under local zoning ordinances, easement encroachments, boundary discrepancies, and flood zone determinations under state and local floodplain regulations.
• Assisting C&H with the preparation of marked-up title commitments and the negotiation of permitted exceptions as contemplated by Exhibit P to the PSA. Local counsel will provide state-specific commentary on whether particular title exceptions are customary and acceptable, or whether they should be objected to and addressed prior to closing.
2. Zoning and Land Use Compliance. Each local counsel firm will be responsible for the following zoning and land use matters in their respective jurisdictions:
• Obtaining zoning confirmation letters (or, where such letters are not available from the applicable municipality, zoning compliance certificates or equivalent documentation) from each local municipality having jurisdiction over the applicable portfolio property, confirming the current zoning classification of the property.
• Confirming that the current use of each property (as described in the rent rolls and lease abstracts included in the data room) constitutes a permitted use under the applicable zoning ordinance, including any applicable overlay district or planned development requirements.
• Identifying any non-conforming use, variance, special exception, conditional use permit, or site plan approval issues affecting any property, and advising C&H as to the legal implications of such issues for the transaction, including any risk of loss of non-conforming use status as a result of the change in ownership at the entity level.
A total of 14 zoning confirmation letters are to be obtained across the five jurisdictions, corresponding to each of the 14 portfolio properties.
3. Lease Review Support. The portfolio is encumbered by 87 commercial leases (including ground floor retail leases, office leases, and industrial/warehouse leases). Each local counsel firm will:
• Review state-specific landlord-tenant law issues affecting the leases for properties in their jurisdiction, with particular attention to: (i) assignment and assumption provisions and whether the entity-level transfer triggers any assignment or consent requirements under applicable state law or lease terms; (ii) estoppel certificate requirements and the enforceability of tenant estoppel certificates under state law; (iii) security deposit handling obligations, including any statutory requirements for segregation, interest accrual, or notice to tenants upon change of ownership; and (iv) SNDA enforceability under state law, including any state-specific requirements for recording or notarization.
• Advise C&H on any state-specific notice requirements for change of ownership, including whether applicable state law requires landlords to provide written notice to tenants of a change in the identity of the property owner or managing agent, the form and timing of such notice, and the consequences of failure to provide such notice.
4. Transfer Tax Analysis and Filing. Transfer tax matters represent one of the most significant areas of local counsel responsibility in this transaction. Each local counsel firm will:
• Analyze the controlling-interest transfer tax implications (or, in the case of Florida, documentary stamp tax implications) of the entity-level purchase for properties in their jurisdiction, including the calculation methodology, applicable rates, exemptions (if any), and filing requirements.
• Prepare and file all required transfer tax returns, declarations, and supporting documentation in the applicable jurisdictions, including any county-level filings where required.
• Coordinate with Sylvia Hartwell, C&H Tax Partner (Washington, D.C. office), and Naomi Ikeda, Tax Partner at Ashford Prewitt LLP (the Buyer's independent accounting firm), on transfer tax calculations, valuation methodologies, and the allocation of purchase price to individual properties for transfer tax purposes. All transfer tax calculations are to be reviewed and approved by Ms. Hartwell prior to filing.
5. Foreign Qualification Filings. Each of the 14 Target Entities is organized under the laws of the State of Delaware and is foreign-qualified to do business in the state where its respective property is located. Each local counsel firm will:
• Prepare and file any amendments or updates to the foreign qualification certificates for each Target Entity in its jurisdiction to reflect new ownership by Fairwater REIT following the closing, to the extent required by applicable state law.
• Confirm the good standing of each Target Entity in its state of foreign qualification, both as of the date of the engagement and as of a date not more than five business days prior to the closing date.
• Coordinate with C&H's Delaware counsel (if applicable) and with the relevant Secretary of State's office to ensure that all filings are processed in a timely manner.
6. Closing Opinions. Each local counsel firm will deliver a closing opinion letter in customary form, dated as of the closing date. The closing opinions are a critical deliverable under the PSA and the lender consent agreements. Specifically:
• Each opinion will be addressed to: (i) Fairwater Real Estate Investment Trust (the Buyer); (ii) Calderwood & Harkness LLP (the Buyer's counsel); and (iii) the applicable lender(s) whose loans secure properties in the jurisdiction (i.e., Pinnacle Federal Bank, N.A., Veltrano Capital Lending Corp., and/or Sycamore Life Insurance Company, as applicable).
• Each opinion will cover the following substantive matters: (a) due organization and good standing of the applicable Target Entities in the state of property location; (b) due authorization of the membership interest transfer by the Seller (Greystone Meridian Partners Fund III, L.P., acting through its general partner, Greystone Meridian Capital LLC); (c) enforceability of the assignment and assumption documents under applicable state law; (d) no conflict with applicable state law or known state court orders; (e) transfer tax compliance, confirming that all required transfer tax returns and declarations have been filed and all transfer taxes have been paid or are being paid at closing; and (f) foreign qualification of the Target Entities in the applicable state.
• The form and substance of each opinion will be subject to C&H's review and approval, as described in greater detail in Section V below.
7. Recording Confirmations. Although the transaction is structured as an entity-level transfer and therefore does not involve the recording of deeds, each local counsel firm will:
• Confirm that any recordable documents (to the extent any such documents are required in connection with the transaction, such as memoranda of assignment or amended certificates of formation) and all transfer tax returns, declarations, and related filings are properly filed in each applicable county recorder's office or clerk's office.
• Provide written recording confirmations, including copies of file-stamped documents, for compilation by C&H into the post-closing deliverables package.
B. State-Specific Scope Variations
In addition to the common scope described above, each local counsel firm will be responsible for the following state-specific matters:
Texas (Breckenridge Osgood LLP).
• No state transfer tax. Texas does not impose a state-level transfer tax on conveyances of real property or on controlling-interest transfers. Breckenridge Osgood will confirm the absence of a state transfer tax and will confirm that only nominal local recording fees are applicable in Harris County (for the Westlake Distribution Hub and Katy Freeway Logistics Park) and Tarrant County (for Alliance Commerce Center).
• Lender coordination. Breckenridge Osgood will coordinate with Whitfield & Archer LLP (Sandra Whitfield, Partner) on Pinnacle Federal Bank lender consent requirements specific to the three Texas properties. Given that Breckenridge Osgood and Whitfield & Archer occupy the same building at 717 Texas Avenue, Houston, this coordination is expected to be particularly efficient.
• County coverage. The three Texas properties are located in two counties: Harris County (Westlake Distribution Hub and Katy Freeway Logistics Park) and Tarrant County (Alliance Commerce Center). Breckenridge Osgood has confirmed its ability to handle filings in both counties.
Georgia (Talmadge Beaumont LLP).
• Controlling-interest transfer tax. Talmadge Beaumont will analyze the applicability of Georgia's controlling-interest transfer tax (O.C.G.A. § 48-6-1 et seq.) to the entity-level transfer of the four Georgia Target Entities and will prepare all required transfer tax declarations. The estimated transfer tax exposure is approximately $1,250,000.
• Multiple lender relationships. Georgia presents the most complex lender coordination requirements in the portfolio, as the four Georgia properties involve three separate lender relationships. Talmadge Beaumont will coordinate with: (i) Whitfield & Archer LLP (Sandra Whitfield) on Pinnacle Federal Bank consent requirements for Fairfield Logistics Center I and Fairfield Logistics Center II; (ii) Cranford McCabe LLP (Leo Cranford, Partner) on Veltrano Capital consent requirements for Buckhead Place Office Tower; and (iii) Partridge Wynn & Slater LLP (Claire Wynn, Partner) on Sycamore Life Insurance consent requirements for Peachtree Corners Logistics Center.
• County coverage. The four Georgia properties are located across two counties: Fulton County (Fairfield Logistics Center I, Fairfield Logistics Center II, and Buckhead Place Office Tower in Atlanta) and Gwinnett County (Peachtree Corners Logistics Center). Note that although the Fairburn address for the Fairfield properties is sometimes associated with both Fulton County and Fayette County, the properties' legal descriptions confirm they are situated within Fulton County.
• Highest property count. As the jurisdiction with the highest number of properties (four), Georgia will require the most extensive title, survey, zoning, and lease review work among the five jurisdictions.
North Carolina (Haversham Cole PLLC).
• Excise tax on controlling-interest transfer. Haversham Cole will analyze the applicability of North Carolina's excise tax on controlling-interest transfers (N.C. Gen. Stat. § 105-228.28 et seq.) to the entity-level transfer of GMP SouthPark LLC and will prepare all required excise tax filings. The estimated excise tax exposure is approximately $180,000.
• Single property / lender coordination. The North Carolina engagement involves a single property (SouthPark Corporate Center, Mecklenburg County) and a single lender relationship (Veltrano Capital, Loan 2-B). Haversham Cole will coordinate with Cranford McCabe LLP (Leo Cranford, Partner) on Veltrano Capital lender consent requirements.
• Smallest engagement. This is the smallest engagement by property count. Nevertheless, the opinion, transfer tax, and lender consent work will require substantive attention. Haversham Cole should expect approximately one-third to one-half of the per-property effort relative to the other jurisdictions, given the reduced number of leases and the single-lender structure.
Tennessee (Ellsworth Ridley LLP).
• Transfer tax on controlling-interest transfer. Ellsworth Ridley will analyze the applicability of Tennessee's transfer tax on controlling-interest transfers (Tenn. Code Ann. § 67-4-409) to the entity-level transfer of the three Tennessee Target Entities and will prepare all required transfer tax filings. The estimated transfer tax exposure is approximately $740,000.
• Multiple lender relationships. Similar to Georgia, Tennessee involves three separate lender relationships. Ellsworth Ridley will coordinate with: (i) Whitfield & Archer LLP (Sandra Whitfield) on Pinnacle Federal Bank consent requirements for Murfreesboro Distribution Center; (ii) Cranford McCabe LLP (Leo Cranford) on Veltrano Capital consent requirements for Cool Springs Office Park; and (iii) Partridge Wynn & Slater LLP (Claire Wynn) on Sycamore Life Insurance consent requirements for Mount Juliet Commerce Park.
• County coverage. The three Tennessee properties are located in three separate counties: Rutherford County (Murfreesboro Distribution Center), Williamson County (Cool Springs Office Park in Brentwood), and Wilson County (Mount Juliet Commerce Park). Ellsworth Ridley has confirmed its ability to handle filings in all three counties from its Nashville offices.
Florida (Palmetto Strauss PA).
• Documentary stamp tax. Florida imposes documentary stamp tax on deemed consideration for controlling-interest transfers (Fla. Stat. § 201.02). Palmetto Strauss will analyze the applicability of this tax to the entity-level transfer of the three Florida Target Entities and will prepare all required documentary stamp tax returns and filings. The estimated documentary stamp tax exposure is approximately $1,680,000 — the largest single-state transfer tax exposure in the portfolio. Given the magnitude of this exposure, the Florida transfer tax analysis will require the highest degree of scrutiny and coordination with Sylvia Hartwell and the C&H Tax team.
• Lender coordination. Two lender relationships are implicated in Florida: Pinnacle Federal Bank (securing Lakeland Crossings Industrial and Southport Logistics Park) and Veltrano Capital (securing Brickell Bay Office Building). Palmetto Strauss will coordinate with Whitfield & Archer LLP (Sandra Whitfield) on Pinnacle consent matters and Cranford McCabe LLP (Leo Cranford) on Veltrano consent matters.
• County coverage. The three Florida properties are located in three separate counties: Polk County (Lakeland Crossings Industrial), Duval County (Southport Logistics Park in Jacksonville), and Miami-Dade County (Brickell Bay Office Building in Miami). Palmetto Strauss has confirmed its statewide coverage capability, with lead partner Roberto Strauss based in Miami and supporting associates available to handle Polk County and Duval County filings as needed.
V. Opinion Requirements
A. Form and Substance
Each local counsel closing opinion shall be delivered in customary form for commercial real estate transactions in the applicable jurisdiction. Each opinion will be dated as of the closing date. The actual closing date is to be determined; the currently scheduled closing date is May 31, 2024, subject to extension as provided in the PSA.
Each closing opinion shall be addressed to:
1. Fairwater Real Estate Investment Trust (the Buyer);
2. Calderwood & Harkness LLP (the Buyer's counsel); and
3. The applicable lender(s) whose loans secure properties located in the jurisdiction covered by the opinion, specifically:
• Pinnacle Federal Bank, N.A. (for jurisdictions containing properties secured by Pinnacle loans);
• Veltrano Capital Lending Corp. (for jurisdictions containing properties secured by Veltrano loans); and
• Sycamore Life Insurance Company (for jurisdictions containing properties secured by Sycamore loans).
The following table summarizes the opinion addressees by jurisdiction:
Each opinion shall cover the following substantive matters:
1. Due organization and good standing. Confirmation that the applicable Target Entities are duly organized (or, if applicable, duly formed) and in good standing (or equivalent status) in the state in which the applicable property is located, based on certificates of good standing (or equivalent) obtained from the applicable Secretary of State's office as of a date not more than five business days prior to the closing date.
2. Due authorization. Confirmation that the membership interest transfer has been duly authorized by the Seller, Greystone Meridian Partners Fund III, L.P., acting through its general partner, Greystone Meridian Capital LLC, to the extent such authorization is subject to verification under the law of the applicable state.
3. Enforceability. Confirmation that the assignment and assumption of membership interests, and the related transaction documents governed by the law of the applicable state, are enforceable in accordance with their terms under applicable state law, subject to customary qualifications.
4. No conflict. Confirmation that, to the knowledge of the opining counsel (based on the scope of its engagement), the execution, delivery, and performance of the transaction documents by the Seller do not conflict with any applicable state law or any known state court order.
5. Transfer tax compliance. Confirmation that all required transfer tax returns, declarations, and related filings have been filed (or will be filed concurrently with the closing) in the applicable jurisdiction, and that all transfer taxes due in connection with the transaction have been paid or are being paid at closing.
6. Foreign qualification. Confirmation that the applicable Target Entities are duly qualified to transact business as foreign limited liability companies in the applicable state, based on certificates or records obtained from the applicable Secretary of State's office.
B. Assumptions and Qualifications
Each local counsel opinion may include the following customary assumptions and qualifications:
• Standard assumptions regarding the due execution, delivery, and genuineness of all signatures on documents submitted to opining counsel, and the authenticity and completeness of all documents submitted as originals or copies.
• Standard qualifications for the effect of applicable bankruptcy, insolvency, receivership, reorganization, moratorium, fraudulent conveyance, and other similar laws affecting creditors' rights generally, and for the effect of general principles of equity (whether applied in a proceeding at law or in equity), including principles of commercial reasonableness, good faith, and fair dealing.
• Reliance on good-standing certificates from the applicable Secretary of State's office as of a recent date, without independent investigation into the status of the entity.
• Reliance on C&H's review of Delaware organizational documents (operating agreements, certificates of formation, and amendments thereto) and Delaware good-standing certificates for each Target Entity. Each local counsel firm may expressly rely on C&H's Delaware law opinion (to the extent C&H delivers one) for matters governed by Delaware law, and each local counsel opinion will be limited to matters of the law of the applicable state.
C. Draft Opinion Submission Timeline
To ensure adequate time for review and comment, the following timeline shall apply to the preparation and finalization of closing opinions:
• Draft opinions: Each local counsel firm shall submit a draft of its proposed closing opinion to C&H (attention: Grace Nakamura, Lead Associate) no later than 30 calendar days prior to the scheduled closing date. Based on the currently scheduled closing date of May 31, 2024, draft opinions are due by May 1, 2024.
• C&H comments: C&H will circulate its comments on each draft opinion within 10 business days of receipt. C&H will also coordinate any comments received from the lenders or lender counsel during this period.
• Final opinions: Following the resolution of C&H's comments, each local counsel firm will execute a final opinion letter and deliver it to C&H to be held in escrow pending the closing. Final executed opinions will be released at closing in accordance with the closing escrow procedures to be established by C&H and Commonwealth National Title Insurance Company.
C&H will distribute the form of local counsel closing opinion (attached hereto as Attachment E) to each local counsel firm upon execution of the engagement letters, and each firm is encouraged to begin preparing its draft opinion as early as practicable.
VI. Fee Arrangements
A. General Principles
All local counsel fees incurred in connection with this transaction are within the overall C&H engagement fee cap of $2,800,000 plus disbursements, as established in the C&H engagement letter with Fairwater REIT dated October 5, 2023 (the "C&H Engagement Letter"). Local counsel fees are treated as "disbursements" under the C&H Engagement Letter and are therefore billed through to Fairwater REIT in addition to C&H's own professional fees. The C&H Engagement Letter requires that all disbursements in excess of $25,000 per vendor be disclosed to the client and approved in advance; accordingly, each local counsel engagement will be disclosed to and approved by Brian Westbrook, General Counsel of Fairwater REIT, and Jessica Thornton, Deputy General Counsel and Head of Transactions of Fairwater REIT.
Each local counsel engagement will be governed by a separate engagement letter between the applicable local counsel firm and Calderwood & Harkness LLP, acting as agent for the client, Fairwater Real Estate Investment Trust. The form of local counsel engagement letter is attached hereto as Attachment A.
B. Fee Estimates by Firm
The following table summarizes the estimated fee range for each local counsel firm, together with the basis for each estimate:
Estimated Total Local Counsel Fees: $435,000 – $575,000
The above estimates are preliminary and will be refined as part of the engagement letter negotiation process. C&H will seek to negotiate flat-fee or capped fee arrangements with each local counsel firm where possible, particularly for discrete deliverables such as zoning confirmation letter procurement, transfer tax filings, and closing opinions. To the extent any local counsel firm exceeds the upper end of its estimated fee range, the firm will be required to notify C&H (attention: Angela Fontaine, Billing Partner) promptly and to provide a revised estimate before incurring additional fees.
C. Billing Protocol
The following billing protocols will govern local counsel fee submissions:
• Monthly invoices. Each local counsel firm shall submit monthly invoices to C&H, directed to the attention of Angela Fontaine, Billing Partner, at afontaine@calderwoodharkness.com. Invoices should be submitted no later than the 15th day of the month following the month in which services were rendered.
• Review and approval. C&H will review and approve all local counsel invoices before passing them through to Fairwater REIT for payment. C&H reserves the right to request revisions to any invoice that does not comply with the billing guidelines set forth in the engagement letter or that contains charges outside the agreed scope of engagement.
• Matter reference. All local counsel invoices must reference C&H Matter No. 1036-00004 and should identify the specific properties and work categories (e.g., "title review," "transfer tax analysis," "opinion preparation") to which the time entries relate. This will facilitate accurate tracking and allocation of costs.
• Expense guidelines. Local counsel firms are expected to comply with C&H's standard expense guidelines, which mirror those of Fairwater REIT's outside counsel billing guidelines. In particular, local counsel firms should seek advance approval from C&H before incurring any single disbursement in excess of $5,000 (e.g., filing fees, courier charges, or travel expenses).
VII. Coordination Protocols
A. C&H Point of Contact
The following individuals at Calderwood & Harkness LLP will serve as the primary contacts for all local counsel coordination:
Primary Contact: Grace Nakamura, Lead Associate Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, NY 10022 Telephone: (212) 555-4800
Email: gnakamura@calderwoodharkness.com
Secondary Contact: Rafael Dominguez, Working Associate Calderwood & Harkness LLP 1700 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-3600
Email: rdominguez@calderwoodharkness.com
Tax Matters: Sylvia Hartwell, Specialist Partner, Tax Calderwood & Harkness LLP 1700 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 555-3650
Email: shartwell@calderwoodharkness.com
For all transfer tax analysis and filing coordination matters.
Supervising Partner: Douglas Fairchild, Responsible Partner Calderwood & Harkness LLP 450 Park Avenue, 28th Floor New York, NY 10022 Telephone: (212) 555-4700
Email: dfairchild@calderwoodharkness.com
All routine substantive communications should be directed to Grace Nakamura in the first instance. Rafael Dominguez will serve as backup and will maintain the local counsel tracker and deliverables calendar. Tax-specific matters should be directed to Sylvia Hartwell, with a copy to Grace Nakamura. Douglas Fairchild should be included on communications involving material legal issues, fee disputes, or matters requiring partner-level decision-making.
B. Communication and Document Sharing
• Copy protocol. All substantive communications between local counsel and any third party (including lender counsel, title company, surveyors, and municipal authorities) are to be copied to C&H's primary point of contact (Grace Nakamura). Routine scheduling and administrative communications need not be copied, but substantive legal analysis, draft deliverables, and correspondence with opposing counsel or lender counsel must be shared with C&H.
• Data room access. Each local counsel firm will be granted access to the Fairwater/GMP Fund III virtual data room (hosted on Crestline Solutions) for documents relevant to their jurisdiction. Access will be provided pursuant to the clean team and data room protocol established on October 22, 2023 (the "Data Room Protocol"). Each local counsel firm will designate no more than four authorized users for data room access, and all authorized users will be required to acknowledge the Data Room Protocol prior to being granted access credentials. C&H will coordinate the issuance of credentials with the data room administrator.
• Document sharing. All draft deliverables, memoranda, and correspondence should be shared via C&H's secure document management system. C&H will provide each local counsel firm with instructions for accessing the document management system upon execution of engagement letters. Local counsel should avoid transmitting confidential documents via unsecured email; if email transmission is necessary, documents should be password-protected and the password communicated separately.
• Weekly status calls. During active diligence periods and the pre-closing period (commencing approximately eight weeks prior to the scheduled closing date), C&H will schedule weekly status calls with all local counsel firms. These calls will be held on a combined basis (i.e., all five firms on a single call) unless C&H determines that separate jurisdiction-specific calls are more appropriate. C&H will distribute call agendas and maintain minutes of each call. The current expectation is that weekly calls will commence in January 2024 during the active title and survey review period and will continue through closing.
C. Interaction with Seller's Counsel
Local counsel firms should not communicate directly with Blackridge Hayes LLP, counsel to the Seller, or with any of the Seller's local representatives, without prior coordination with and approval from C&H. The Seller's lead counsel at Blackridge Hayes is Nathaniel Pryce, Lead Partner, and Thomas Keating, Senior Associate, both based in Blackridge Hayes's New York office. All title objection, cure, and negotiation matters are to be channeled through C&H to Blackridge Hayes in accordance with the protocols established under the PSA. This protocol is essential to ensuring consistency in the Buyer's negotiating position across all five jurisdictions and to preventing inadvertent waivers or inconsistent positions.
If a local counsel firm is contacted directly by Blackridge Hayes or by any representative of the Seller or any Target Entity, the local counsel firm should advise the contacting party that all communications should be directed to C&H and should promptly inform Grace Nakamura of the contact.
D. Interaction with Lender Counsel
Local counsel firms will need to interact with lender counsel in connection with the preparation and delivery of closing opinions and the satisfaction of lender consent deliverables. The lender counsel contacts are as follows:
• Whitfield & Archer LLP — counsel to Pinnacle Federal Bank, N.A.
Lead Partner: Sandra Whitfield
Address: 717 Texas Avenue, Suite 2500, Houston, Texas 77002
Telephone: (713) 555-3800 Relevant jurisdictions: Texas, Georgia (Fairfield I and II), Tennessee (Murfreesboro), Florida (Lakeland, Southport)
• Cranford McCabe LLP — counsel to Veltrano Capital Lending Corp.
Lead Partner: Leo Cranford
Address: 100 Southeast Second Street, Suite 3000, Miami, Florida 33131
Telephone: (305) 555-8100 Relevant jurisdictions: Georgia (Buckhead), North Carolina (SouthPark), Tennessee (Cool Springs), Florida (Brickell)
• Partridge Wynn & Slater LLP — counsel to Sycamore Life Insurance Company
Lead Partner: Claire Wynn
Address: 185 Asylum Street, Suite 2200, Hartford, Connecticut 06103
Telephone: (860) 555-2900 Relevant jurisdictions: Georgia (Peachtree Corners), Tennessee (Mount Juliet)
All interactions with lender counsel are to be coordinated through C&H. C&H will make introductions between local counsel and lender counsel as needed, and will facilitate the exchange of draft opinions and related deliverables. Local counsel should not make substantive commitments to lender counsel regarding opinion coverage, assumptions, or qualifications without first obtaining C&H's approval.
E. Interaction with Third-Party Consultants
Local counsel may need to coordinate with the following third-party consultants in connection with their respective engagements:
• Commonwealth National Title Insurance Company — title insurance underwriter and escrow agent for the transaction.
Kenneth Stanhope, SVP, Title Officer (kstanhope@commonwealthtitle.com) Virginia Moorehead, AVP, National Counsel (vmoorehead@commonwealthtitle.com) Coordination areas: title commitments, state-specific endorsements, recording procedures, and escrow matters.
• Meridian Land Surveying, Inc. — surveyor engaged to prepare ALTA/NSPS land title surveys for all 14 portfolio properties.
Daniel Caulfield, PLS, PE, Project Manager (dcaulfield@meridiansurvey.com) Coordination areas: state-specific survey certification requirements, setback and easement issues, and boundary discrepancies.
• Trident Environmental Group LLC — environmental consultant engaged to prepare Phase I Environmental Site Assessments and Property Condition Assessments for all 14 portfolio properties.