CALDERWOOD & HARKNESS LLP
450 Park Avenue, 28th Floor New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
1700 K Street NW, Suite 900 Washington, DC 20006 Telephone: (202) 956-7500 Facsimile: (202) 956-7599
March 29, 2024
Via Email and Sundial Data Systems
Kenneth Stanhope, Senior Vice President Commonwealth National Title Insurance Company 191 Peachtree Street NE, Suite 800 Atlanta, Georgia 30303
Re: Request for Title Insurance Endorsements — 14-Property Sun Belt Logistics & Office Portfolio Insured: Fairwater Real Estate Investment Trust C&H Matter No.: 1036-00004 Aggregate Insured Amount: $1,100,000,000 (allocated per property schedule) Title Policy Form: ALTA Owner's Policy (2021 form)
Dear Mr. Stanhope:
We write on behalf of our client, Fairwater Real Estate Investment Trust ("Fairwater" or the "Buyer"), a Maryland real estate investment trust, in connection with Fairwater's pending acquisition of a 14-property logistics and office portfolio located across the southeastern United States (the "Portfolio" or the "Transaction"). This letter constitutes a formal request for specific title insurance endorsements to be attached to the pro forma ALTA Owner's Policies (2021 form) that Commonwealth National Title Insurance Company ("Commonwealth" or the "Company") will issue for each of the 14 properties comprising the Portfolio. We appreciate Commonwealth's cooperation and responsiveness throughout the title review process to date, and we look forward to your continued partnership as we move toward an anticipated closing in late May or early June of this year.
The following sections of this letter describe the Transaction in greater detail, identify the properties and applicable Target Entities, set forth the endorsements requested for all 14 properties on a portfolio-wide basis, identify property-specific and state-specific endorsement requirements, address lender-required endorsements for assumed indebtedness, and request a comprehensive fee quotation and pro forma policy markup for our review. We have enclosed several schedules and exhibits referenced herein for your convenience.
1. Introduction and Transaction Overview
As you are aware, Calderwood & Harkness LLP ("C&H") serves as buyer's counsel to Fairwater Real Estate Investment Trust in connection with the pending acquisition of 100% of the membership interests in fourteen (14) property-owning, single-purpose Delaware limited liability companies (collectively, the "Target Entities") from Greystone Meridian Partners Fund III, L.P. ("Seller" or "GMP Fund III"), a Delaware limited partnership. The aggregate purchase price for the Transaction is One Billion One Hundred Million Dollars ($1,100,000,000), subject to customary prorations and adjustments as set forth in the governing transaction documents.
The Transaction is structured as an entity-level acquisition. Specifically, Fairwater will acquire 100% of the membership interests in each of the fourteen Target Entities, rather than acquiring fee title to the underlying real properties by asset-level deed transfer. Each Target Entity is a single-purpose Delaware limited liability company that holds fee simple title to one of the 14 properties comprising the Portfolio. Following the closing, Fairwater will be the sole member of each Target Entity, and each Target Entity will continue to hold fee simple title to its respective property. This entity-level transfer structure has significant implications for the title insurance endorsements requested herein, particularly with respect to the Non-Imputation Endorsement and the Entity Ownership Endorsement, as discussed in greater detail below.
The Portfolio consists of fourteen (14) commercial properties located across five states in the Sun Belt region of the United States: Georgia (4 properties), Texas (3 properties), Florida (3 properties), Tennessee (3 properties), and North Carolina (1 property). In the aggregate, the Portfolio comprises approximately 5,224,000 rentable square feet, consisting of ten (10) logistics and warehouse properties and four (4) office properties. The Portfolio represents a strategic addition to Fairwater's existing holdings in the Sun Belt logistics and office sectors.
The Transaction is governed by the Purchase and Sale Agreement dated February 28, 2024 (as amended, the "PSA"), by and between Seller and Buyer. The PSA includes, among other things, Exhibit P, which sets forth the negotiated schedule of permitted title exceptions (the "Permitted Exceptions") applicable to each property. The Permitted Exceptions schedule has been the subject of extensive negotiation between the parties and their respective counsel, and the pro forma title policies to be issued by Commonwealth should reflect only those exceptions enumerated on PSA Exhibit P as Schedule B-II exceptions. In addition, the PSA includes Exhibit K, which sets forth the allocation of the aggregate purchase price among the 14 properties for purposes of, among other things, determining the insured amount under each individual title policy.
Commonwealth has previously issued title commitments for each of the 14 properties comprising the Portfolio. C&H has completed its review of each title commitment and the underlying exception documents, and has coordinated with local counsel in each of the five applicable states to confirm zoning, access, and other property-specific matters. This letter represents the next step in the title clearance process: the formal request for endorsements to be attached to each pro forma ALTA Owner's Policy (2021 form).
The aggregate insured amount across all 14 policies is $1,100,000,000, allocated among the individual properties in accordance with the property schedule set forth in Section 2 below and in Enclosure 1. Each policy will name Fairwater Real Estate Investment Trust as the insured, in its capacity as the acquirer of 100% of the membership interests in the applicable Target Entity.
2. Identification of Properties and Target Entities
Set forth below is a schedule identifying each of the 14 properties comprising the Portfolio, together with the applicable Target Entity, the property address, and the allocated insured amount. The allocated insured amounts are derived from PSA Exhibit K and reflect the negotiated allocation of the aggregate $1,100,000,000 purchase price among the 14 properties. An expanded version of this schedule is included as Enclosure 1.
As noted above, the named insured on each ALTA Owner's Policy will be Fairwater Real Estate Investment Trust, as the acquirer of 100% of the membership interests in each Target Entity. Each Target Entity is and will remain the fee owner of the applicable property. Accordingly, the policies must be structured to afford Fairwater full owner's coverage notwithstanding the entity-level nature of the acquisition.
In addition to the owner's policies, we note that the endorsements requested herein must also be acceptable to, and in certain instances must specifically name, each existing mortgage lender whose indebtedness is being assumed by Fairwater in connection with the Transaction. The three existing lenders and their respective loan pools are as follows:
(a) Pinnacle Federal Bank, N.A. — Lender on Loans 1-A through 1-H, secured by eight (8) logistics properties (Fairfield Logistics Center I, Fairfield Logistics Center II, Westlake Distribution Hub, Katy Freeway Logistics Park, Alliance Commerce Center, Lakeland Crossings Industrial, Southport Logistics Park, and Murfreesboro Distribution Center). Aggregate outstanding principal balance ("OPB"): approximately $421,600,000.
(b) Veltrano Capital Lending Corp. — Lender on Loans 2-A through 2-D, secured by four (4) office properties (Buckhead Place Office Tower, SouthPark Corporate Center, Cool Springs Office Park, and Brickell Bay Office Building). Aggregate OPB: approximately $142,300,000.
(c) Sycamore Life Insurance Company — Lender on Loans 3-A and 3-B, secured by two (2) logistics properties (Peachtree Corners Logistics Center and Mount Juliet Commerce Park). Aggregate OPB: approximately $48,100,000.
We address lender-specific endorsement requirements in greater detail in Section 5 below.
3. Endorsements Requested for All 14 Properties
This Section 3 sets forth the endorsements that Fairwater requests be attached to each of the 14 ALTA Owner's Policies (2021 form) on a portfolio-wide basis. For each endorsement, we have identified the applicable ALTA endorsement form number (or state-specific equivalent where applicable), together with a description of the purpose and scope of the endorsement. State-specific considerations are addressed in Section 4.
3.1 Owner's Comprehensive Endorsement (ALTA 9.3-06 or State Equivalent)
We request an ALTA 9.3-06 Owner's Comprehensive Endorsement (or the applicable state-specific equivalent) for each of the 14 properties. The Comprehensive Endorsement provides broad coverage encompassing restrictions, encroachments, mineral rights, and other standard comprehensive protections that are essential to an acquisition of this magnitude.
Specifically, the ALTA 9.3-06 endorsement provides coverage against loss or damage sustained by the insured by reason of: (i) the existence of any covenant, condition, restriction, or limitation that affects the title to the land; (ii) any violation of any covenant, condition, restriction, or limitation on the land existing at the date of the policy; (iii) the exercise of any right to use the surface of the land for the extraction or development of minerals; and (iv) any encroachment of improvements located on the land onto adjoining land, or any encroachment onto the land of improvements located on adjoining land, existing at the date of the policy.
We request that Commonwealth confirm the availability of this endorsement form in each of the five states in which Portfolio properties are located: Georgia, Texas, Florida, Tennessee, and North Carolina. To the extent the ALTA 9.3-06 form is not available in a particular state, we request the most closely equivalent state-prescribed or state-approved comprehensive endorsement form. We note that Texas, in particular, utilizes prescribed endorsement forms issued by the Texas Department of Insurance, and we address the applicable Texas endorsement forms in Section 4.2 below.
3.2 Access Endorsement (ALTA 17-06 or ALTA 17.1-06)
We request an ALTA 17-06 Access Endorsement (or ALTA 17.1-06, as applicable) for each of the 14 properties. The Access Endorsement insures that the land described in each policy has both actual vehicular and pedestrian access to and from a physically open, public right-of-way. This endorsement is of particular importance for the logistics and warehouse properties in the Portfolio, for which unimpeded vehicular access — including access for tractor-trailer and other heavy commercial vehicles — is critical to operations.
Set forth below is the street or road identified on the applicable ALTA/NSPS Land Title Survey as providing primary access to each property. All surveys have been prepared by Meridian Land Surveying, Inc. under the supervision of Daniel Caulfield, PLS, PE, and are certified to Fairwater Real Estate Investment Trust, Commonwealth National Title Insurance Company, and each applicable lender.
1. Fairfield Logistics Center I — Fairfield Industrial Boulevard (public)
2. Fairfield Logistics Center II — Fairfield Industrial Boulevard (public)
3. Westlake Distribution Hub — Westlake Parkway (public)
4. Katy Freeway Logistics Park — Katy Freeway / US Route 90 (public)
5. Alliance Commerce Center — Alliance Gateway Boulevard (public)
6. Lakeland Crossings Industrial — Drane Field Road (public)
7. Southport Logistics Park — Southport Connector Road (public)
8. Murfreesboro Distribution Center — Joe B. Jackson Parkway (public)
9. Buckhead Place Office Tower — Peachtree Road NE (public)
10. SouthPark Corporate Center — Fairview Road (public)
11. Cool Springs Office Park — Virginia Way (public)
12. Brickell Bay Office Building — Brickell Avenue (public)
13. Peachtree Corners Logistics Center — Peachtree Industrial Boulevard (public)
14. Mount Juliet Commerce Park — South Mount Juliet Road (public)
We request that each Access Endorsement identify the specific public right-of-way providing access as shown on the applicable survey. To the extent the ALTA 17.1-06 form (which provides affirmative coverage for access to a specific street) is available in the applicable state, we prefer the ALTA 17.1-06 form over the ALTA 17-06 form.
3.3 Survey Endorsement (ALTA 25-06 or ALTA 25.1-06)
We request an ALTA 25-06 Survey Endorsement (or ALTA 25.1-06, as applicable) for each of the 14 properties. The Survey Endorsement insures matters shown on the ALTA/NSPS Land Title Survey prepared for each property and is a standard component of title insurance coverage in a transaction of this type.
ALTA/NSPS Land Title Surveys have been prepared for each of the 14 properties by Meridian Land Surveying, Inc. in accordance with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys, jointly established by the American Land Title Association and the National Society of Professional Surveyors. Each survey has been prepared in accordance with the following Table A optional survey responsibilities and specifications:
• Item 1 — Monuments placed (or a statement if monuments are not placed) at all corners of the boundary of the property
• Item 2 — Address(es) of the surveyed property
• Item 3 — Flood zone classification with proper community and panel numbers (per FEMA)
• Item 4 — Gross land area (and other areas if specified by the client)
• Item 6(a) — Evidence of utilities (above and below ground) on or serving the property
• Item 6(b) — Utility locate request identification
• Item 7(a) — Exterior dimensions of all buildings at ground level
• Item 7(b)(1) — square footage of exterior footprint of all buildings at ground level
• Item 7(c) — Measured height of all buildings above grade at a defined location
• Item 8 — Substantial features observed in the course of the survey (not otherwise addressed)
• Item 9 — Striping and markings for parking spaces, tally of spaces
• Item 10 — Determination of the relationship of the boundaries of the property to the boundaries of any identified adjoining properties
• Item 11(a) — Location of governmental agency survey-related requirements (zoning setback requirements)
• Item 11(b) — Determination of compliance or non-compliance with setbacks, height limitations, and parking requirements
• Item 13 — Names of adjoining owners per current tax records
• Item 14 — Distance to the nearest intersecting street
• Item 16 — Evidence of proposed or observed significant construction activity on the surveyed property and on adjacent properties within 100 feet
• Item 17 — Evidence of significant changes in the street right-of-way, within the knowledge of the surveyor
• Item 18 — Observed evidence of underground structures or utilities
• Item 19 — Observed evidence of site use as a solid waste dump, sump, or landfill
A complete list of the Table A items specified is included as Enclosure 2. All surveys have been certified to Fairwater Real Estate Investment Trust, Commonwealth National Title Insurance Company, and each applicable existing mortgage lender whose debt is being assumed.
3.4 Zoning Endorsement (ALTA 3-06 or ALTA 3.1-06)
We request an ALTA 3.1-06 Zoning Endorsement (with parking and loading) for each of the 14 properties. Where the ALTA 3.1-06 form is not available in a particular state, we request the ALTA 3-06 form or the most closely equivalent state-prescribed or state-approved zoning endorsement.
The Zoning Endorsement insures that the use of each property as a logistics/warehouse facility or office building (as applicable) is a permitted use under the applicable local zoning ordinances and regulations. This endorsement is particularly important given the portfolio nature of this acquisition and the diversity of zoning jurisdictions across five states. Fairwater relies on the continuity of the existing use at each property as a fundamental underwriting assumption.
Zoning confirmation letters have been obtained for all 14 properties. The zoning classification for each property has been confirmed by local counsel engaged by C&H in each applicable jurisdiction, as follows:
Georgia Properties (4): Confirmed by Talmadge Beaumont LLP (Catherine Beaumont, Esq.), Atlanta, Georgia. Local counsel has provided written zoning opinion letters for each of the four Georgia properties, confirming the applicable zoning classifications and the permissibility of the existing uses.
Texas Properties (3): Confirmed by Breckenridge Osgood LLP (James Breckenridge, Esq.), Houston, Texas. Local counsel has provided written zoning opinion letters for each of the three Texas properties. We note that the City of Houston does not maintain a traditional zoning ordinance, and Mr. Breckenridge's opinion with respect to the Westlake Distribution Hub addresses the deed restriction and land use regulatory framework applicable to properties within the extraterritorial jurisdiction of Houston.
Florida Properties (3): Confirmed by Palmetto Strauss PA (Roberto Strauss, Esq.), Miami, Florida. Local counsel has provided written zoning opinion letters for each of the three Florida properties.
Tennessee Properties (3): Confirmed by Ellsworth Ridley LLP (Diane Ellsworth, Esq.), Nashville, Tennessee. Local counsel has provided written zoning opinion letters for each of the three Tennessee properties.
North Carolina Property (1): Confirmed by Haversham Cole PLLC (Marshall Haversham, Esq.), Charlotte, North Carolina. Local counsel has provided a written zoning opinion letter for the SouthPark Corporate Center.
We will provide copies of each zoning opinion letter to Commonwealth upon request, though we understand that Commonwealth's underwriting standards may require independent verification of zoning classifications through municipal inquiry.
3.5 Contiguity Endorsement (ALTA 19-06 or ALTA 19.1-06)
We request an ALTA 19-06 Contiguity Endorsement (or ALTA 19.1-06, as applicable) for each property in the Portfolio that consists of multiple tax parcels or adjacent parcels intended to operate as a single site. The Contiguity Endorsement insures that the parcels comprising the property are contiguous and that there are no gaps or gores between them.
This endorsement is specifically requested for the following properties:
(a) Fairfield Logistics Center I and Fairfield Logistics Center II. These two adjacent properties are located at 4200 and 4300 Fairfield Industrial Boulevard, Fairburn, Georgia 30213, respectively. Although owned by separate Target Entities (GMP Fairfield I LLC and GMP Fairfield II LLC, respectively) and insured under separate policies, the properties share a common boundary and are operated as functionally integrated logistics facilities. We request that the Contiguity Endorsement confirm contiguity between the two parcels at their shared boundary. In addition, to the extent either property consists of more than one tax parcel, the Contiguity Endorsement should confirm the contiguity of all component parcels within that property.
(b) Other Multi-Parcel Properties. Based on our review of the legal descriptions set forth in PSA Exhibit A, several additional properties in the Portfolio are described as consisting of multiple parcels. We request Contiguity Endorsements for each such property to confirm that the component parcels are contiguous and free of gaps or gores. We will confirm the specific properties requiring this endorsement upon finalization of our survey and legal description review, but we anticipate that the following properties may require Contiguity Endorsements based on the multi-parcel nature of their legal descriptions: Alliance Commerce Center (Fort Worth, TX), Southport Logistics Park (Jacksonville, FL), and Mount Juliet Commerce Park (Mount Juliet, TN).
3.6 Same as Survey / Location Endorsement (ALTA 25-06)
In connection with the Survey Endorsement requested in Section 3.3 above, we request that Commonwealth confirm that the legal description contained in each title commitment matches the survey plat and metes-and-bounds description prepared by Meridian Land Surveying, Inc. for the corresponding property. To the extent any discrepancies exist between the legal description in the title commitment and the survey description, we request that Commonwealth (a) identify such discrepancies promptly and (b) work with the surveyor and C&H to reconcile the descriptions prior to issuance of the pro forma policies. The ALTA 25-06 endorsement or its equivalent should provide affirmative coverage that the legal description in the policy corresponds to the property depicted on the survey.
3.7 Tax Parcel Endorsement (ALTA 18-06 or ALTA 18.1-06)
We request an ALTA 18-06 Tax Parcel Endorsement (or ALTA 18.1-06, as applicable) for each of the 14 properties. The Tax Parcel Endorsement insures that each property constitutes one or more separate tax parcels, identified by the applicable assessor's parcel number, and is not combined for tax purposes with any other real property that is not part of the insured property.
This endorsement is of particular importance given the portfolio-level nature of this acquisition and the allocation of the aggregate purchase price among the 14 properties. Fairwater requires assurance that each property is separately assessed for real property tax purposes and that no property is inadvertently assessed as part of a larger parcel that includes land not owned by the applicable Target Entity.
For reference, estimated 2024 real property taxes across the entire Portfolio are approximately $14,760,000 annually. Tax due diligence has been conducted for each property, and current tax payment status has been confirmed through the applicable closing date. Seller is obligated under the PSA to deliver evidence of current tax payment and to prorate real property taxes as of the closing date.
3.8 Non-Imputation Endorsement (ALTA 15-06 or ALTA 15.1-06)
We request an ALTA 15-06 Non-Imputation Endorsement (or ALTA 15.1-06, as applicable) for each of the 14 properties. This endorsement is critically important to Fairwater given the entity-level transfer structure of the Transaction.
Because Fairwater is acquiring 100% of the membership interests in each Target Entity — rather than acquiring fee title to the properties by deed — the Target Entities themselves are not changing. Each Target Entity existed prior to the Transaction and will continue to exist following the closing, with the only change being the identity of the sole member (from GMP Fund III to Fairwater). In this context, there is a risk that the knowledge of the prior owner or controller of each Target Entity (i.e., GMP Fund III and its affiliates, officers, and agents) regarding title defects, encumbrances, or other adverse matters could be imputed to the Target Entity and, through the Target Entity, to Fairwater as the new insured.
The Non-Imputation Endorsement protects Fairwater against this risk by confirming that the Company will not deny coverage based on the knowledge of any person who controlled or managed the Target Entity prior to the closing. This endorsement is standard in entity-level acquisitions of this type and is required by Fairwater as a condition to closing.
3.9 Entity Ownership Endorsement (ALTA 36-06 or ALTA 36.1-06)
We request an ALTA 36-06 Entity Ownership Endorsement (or ALTA 36.1-06, as applicable) for each of the 14 properties. This endorsement, sometimes referred to as the "Fairway" or "Mezzanine" endorsement in industry parlance, directly addresses the entity-level transfer structure of the Transaction.
The ALTA 36-06 endorsement provides coverage for loss arising from the transfer of 100% of the ownership interests in the entity that holds fee title to the insured property, rather than a transfer of the property itself by deed. In a traditional asset-level acquisition, the buyer takes a new deed and receives a new owner's policy based on the recording of that deed. In an entity-level acquisition, no new deed is recorded, and the title insurer must specifically endorse the policy to confirm that coverage extends to the new beneficial owner of the entity.
This endorsement is essential to the Transaction and works in conjunction with the Non-Imputation Endorsement (Section 3.8 above) to ensure that Fairwater receives the full benefit of owner's title insurance coverage notwithstanding the entity-level structure of the acquisition.
3.10 Restrictions, Encroachments, Minerals Endorsement (ALTA 9-06 or ALTA 9.3-06)
To the extent not already fully addressed by the Owner's Comprehensive Endorsement requested in Section 3.1 above, we request a separate ALTA 9-06 Restrictions, Encroachments, Minerals Endorsement for each of the 14 properties. This endorsement provides coverage against loss arising from: (i) violations of existing covenants, conditions, and restrictions affecting the property; (ii) encroachments of improvements on the property onto adjoining land, or encroachments of improvements on adjoining land onto the property; and (iii) the exercise of any right to extract or develop minerals on or beneath the property.
We recognize that the ALTA 9.3-06 Comprehensive Endorsement requested in Section 3.1 may subsume the coverage provided by the ALTA 9-06 endorsement. However, out of an abundance of caution and to ensure comprehensive coverage, we request this endorsement separately to the extent Commonwealth's underwriting practice distinguishes between the two forms. If Commonwealth confirms that the ALTA 9.3-06 endorsement fully encompasses the coverage provided by the ALTA 9-06 endorsement, we are amenable to relying solely on the ALTA 9.3-06 form.
3.11 Environmental Protection Lien Endorsement (ALTA 8.1-06)
We request an ALTA 8.1-06 Environmental Protection Lien Endorsement for each of the 14 properties. This endorsement insures against loss arising from the existence of environmental protection liens recorded or filed against the property. Environmental protection liens may be imposed by federal, state, or local governmental authorities in connection with environmental contamination or remediation obligations, and such liens may take priority over other interests in the property, including the interest of the insured.
This endorsement is of particular relevance for two properties in the Portfolio at which de minimis recognized environmental conditions ("RECs") have been identified in Phase I Environmental Site Assessment reports prepared by Trident Environmental Group LLC (Rachel Kwan, Senior Environmental Scientist). Specifically:
(a) Westlake Distribution Hub (11500 Westlake Parkway, Houston, TX 77082). The Phase I ESA identified a de minimis REC related to historical petroleum storage on an adjacent parcel, with no evidence of migration onto the subject property. No further investigation was recommended.
(b) Lakeland Crossings Industrial (7100 Drane Field Road, Lakeland, FL 33811). The Phase I ESA identified a de minimis REC related to the former presence of an underground storage tank that was removed in 2009, with a closure letter issued by the Florida Department of Environmental Protection in 2011. No further investigation was recommended.
While neither of these conditions is expected to give rise to an environmental protection lien, the Environmental Protection Lien Endorsement provides an additional layer of protection for Fairwater. We request this endorsement for all 14 properties, not solely for the two properties at which de minimis RECs were identified, as a matter of prudent risk management.
3.12 Subdivision Endorsement (ALTA 26-06)
We request an ALTA 26-06 Subdivision Endorsement for each of the 14 properties. This endorsement insures that the property constitutes a lawfully created lot, parcel, or tract and that, if the property was created by a subdivision, the subdivision complied with all applicable subdivision laws, ordinances, and regulations in effect at the time of the subdivision. In the alternative, if the property was not created by a formal subdivision, the endorsement confirms that the property's status is not in violation of applicable subdivision regulations.
This endorsement provides critical protection against the risk that a defect in the subdivision process could cloud title or give rise to a challenge to the legal status of the property as a separately conveyable parcel.
3.13 Utility Access Endorsement
We request a Utility Access Endorsement for each of the 14 properties at which utility easements are disclosed as exceptions to title in the applicable title commitment. This endorsement confirms that the insured property has access to utility services, including water, sewer, electricity, natural gas, and telecommunications, through easements or public rights-of-way that benefit the property. Where available as a standard ALTA endorsement, we request the applicable ALTA form; where no standard form exists, we request that Commonwealth provide affirmative insurance over any utility access concern identified in the title commitment.
Our review of the title commitments indicates that utility easements are disclosed as Schedule B-II exceptions for each of the 14 properties. In each case, the utility easements benefit the property by providing access to essential utility services. We request confirmation from Commonwealth that these utility easements do not adversely affect the insured's title and that the endorsement provides affirmative coverage for continued utility access.
3.14 Deletion of or Affirmative Insurance Over Standard Exceptions
We request the deletion of the following standard exceptions from Schedule B-II of each ALTA Owner's Policy (2021 form) issued in connection with the Transaction, or, in the alternative, affirmative insurance over each such standard exception, as follows:
(a) Rights or claims of parties in possession not shown by the public records. We request deletion of this standard exception upon Commonwealth's receipt of the Seller's title affidavit, the form of which is attached to the PSA as Exhibit T. The title affidavit will be executed and delivered by Seller at or prior to closing and will include customary representations regarding parties in possession, confirming that the only parties in possession of each property are the applicable Target Entity (as fee owner) and tenants under recorded or otherwise disclosed leases.
(b) Encroachments, overlaps, boundary line disputes, or other matters that would be disclosed by an accurate survey. We request deletion of this standard exception, or affirmative insurance over it, based on the ALTA/NSPS Land Title Surveys prepared by Meridian Land Surveying, Inc. for each of the 14 properties. As described in Section 3.3 above, the surveys have been prepared in accordance with the 2021 Minimum Standard Detail Requirements and include the Table A items set forth in Enclosure 2. The surveys have been certified to Commonwealth National Title Insurance Company, and we understand that Commonwealth's survey requirements for deletion of this standard exception are met by the surveys as delivered.
(c) Easements or claims of easements not shown by the public records. We request deletion of this standard exception upon Commonwealth's receipt of the Seller's title affidavit (PSA Exhibit T), which will include customary representations regarding unrecorded easements. The title affidavit will confirm that Seller has no knowledge of any unrecorded easements affecting any of the 14 properties, other than those disclosed in the title commitments or on the ALTA/NSPS surveys.
(d) Any lien for unpaid taxes, assessments, or other charges imposed by a governmental authority that are not shown as existing liens by the records of any taxing authority. We request deletion of this standard exception upon confirmation that all real property taxes, assessments, and other governmental charges applicable to each property are current through the closing date. Seller is obligated under the PSA to deliver evidence of current tax payment and to prorate real property taxes as of the closing date. We will provide Commonwealth with tax payment confirmation for each property prior to closing.
(e) Mechanics' and materialmen's liens. We request deletion of this standard exception upon Commonwealth's receipt of a gap indemnity (or bring-down letter) and the Seller's title affidavit (PSA Exhibit T). The title affidavit will include customary representations regarding construction, renovation, and repair work performed at each property within the applicable lien period under the laws of each state, and will confirm that all contractors, subcontractors, laborers, materialmen, and suppliers have been paid in full for any work performed. To the extent any work has been performed within the applicable statutory lien period, Seller will provide lien waivers from all applicable parties.
4. Property-Specific Endorsement Requests
In addition to the portfolio-wide endorsements requested in Section 3 above, this Section 4 addresses endorsement requests that are specific to particular properties or that arise from state-specific title insurance regulatory requirements. The endorsements in this section are supplemental to, and not in lieu of, the endorsements requested in Section 3.
4.1 Georgia Properties (4 Properties)
The following four properties are located in the State of Georgia:
• GMP Fairfield I LLC / Fairfield Logistics Center I — 4200 Fairfield Industrial Blvd, Fairburn, GA 30213
• GMP Fairfield II LLC / Fairfield Logistics Center II — 4300 Fairfield Industrial Blvd, Fairburn, GA 30213
• GMP Buckhead LLC / Buckhead Place Office Tower — 3380 Peachtree Road NE, Atlanta, GA 30326
• GMP Peachtree LLC / Peachtree Corners Logistics Center — 5900 Peachtree Industrial Blvd, Peachtree Corners, GA 30071
With respect to the Georgia properties, we request the following specific endorsements in addition to the portfolio-wide endorsements set forth in Section 3:
(a) Contiguity Endorsement — Fairfield I and Fairfield II. As discussed in Section 3.5 above, we request a Contiguity Endorsement confirming that Fairfield Logistics Center I (4200 Fairfield Industrial Blvd) and Fairfield Logistics Center II (4300 Fairfield Industrial Blvd) are contiguous at their shared boundary along Fairfield Industrial Boulevard in Fairburn, Georgia. These two adjacent facilities are operated as functionally integrated logistics properties, and confirmation of contiguity is essential to Fairwater's operational and financing plans for the properties.
(b) Georgia-Specific Form of Comprehensive Endorsement. We request that Commonwealth confirm whether the standard ALTA 9.3-06 Comprehensive Endorsement is available in Georgia or whether a Georgia-specific form of the comprehensive endorsement is required or preferred. To the extent Georgia title insurance regulations prescribe or limit the form of endorsements available, we request Commonwealth's guidance on the appropriate Georgia-specific equivalent for each endorsement requested in Section 3.
(c) Additional Georgia-Specific Endorsements. We request that Commonwealth identify any additional endorsements that are available under Georgia title insurance regulations and that would be appropriate for properties of this type. In particular, we are interested in any Georgia-specific endorsements addressing future advance priority, usury savings, or other matters that may be relevant to the assumed indebtedness secured by the Georgia properties.
C&H has engaged Talmadge Beaumont LLP (Catherine Beaumont, Esq.) as local counsel in Georgia for this Transaction. We request that Commonwealth coordinate directly with Ms. Beaumont's office on any Georgia-specific title matters. Ms. Beaumont can be reached at (404) 555-1200 or cbeaumont@talmadgebeaumont.com.
4.2 Texas Properties (3 Properties)
The following three properties are located in the State of Texas:
• GMP Westlake LLC / Westlake Distribution Hub — 11500 Westlake Parkway, Houston, TX 77082
• GMP Katy LLC / Katy Freeway Logistics Park — 22600 Katy Freeway, Katy, TX 77449
• GMP Alliance LLC / Alliance Commerce Center — 2800 Alliance Gateway Blvd, Fort Worth, TX 76177
Texas is a regulated-rate state in which the Texas Department of Insurance ("TDI") prescribes the title insurance policy forms and endorsement forms that may be issued by title insurance companies operating in the state. Accordingly, the endorsements requested in Section 3 must be issued using the TDI-prescribed forms applicable in Texas, rather than the standard ALTA endorsement forms. We request the following Texas-specific endorsements for each of the three Texas properties:
(a) T-19 Comprehensive Endorsement. This is the Texas-prescribed equivalent of the ALTA 9.3-06 Comprehensive Endorsement. We request the T-19 endorsement for each of the three Texas properties.
(b) T-19.1 Restrictions Endorsement. This endorsement provides coverage specifically related to restrictive covenants and conditions affecting the property. We request this endorsement for each of the three Texas properties.
(c) T-19.2 Access Endorsement. This is the Texas-prescribed equivalent of the ALTA 17-06 Access Endorsement. We request the T-19.2 endorsement for each of the three Texas properties, identifying the specific public right-of-way providing access as set forth in Section 3.2 above.
(d) T-19.3 Contiguity Endorsement (as applicable). To the extent any of the three Texas properties consists of multiple parcels, we request the T-19.3 Contiguity Endorsement to confirm that the component parcels are contiguous. Based on our preliminary review, we believe this endorsement may be required for the Alliance Commerce Center property. We request Commonwealth's confirmation.
(e) T-36 Survey Deletion Endorsement. This endorsement is issued in connection with the deletion of the standard survey exception from Schedule B-II of the policy. We request the T-36 endorsement for each of the three Texas properties, based on the ALTA/NSPS surveys prepared by Meridian Land Surveying, Inc.
(f) Other TDI-Prescribed Endorsements. We request that Commonwealth identify any additional TDI-prescribed endorsements that are available and appropriate for commercial properties of this type in Texas. We are aware that TDI has promulgated a number of specialized endorsement forms (including T-19.4 through T-42, among others), and we request Commonwealth's guidance on the specific forms applicable to the Transaction.
C&H has engaged Breckenridge Osgood LLP (James Breckenridge, Esq.) as local counsel in Texas for this Transaction. We request that Commonwealth coordinate directly with Mr. Breckenridge's office on any Texas-specific title matters. Mr. Breckenridge can be reached at (713) 555-3400 or jbreckenridge@breckenridgeosgood.com.
4.3 Florida Properties (3 Properties)
The following three properties are located in the State of Florida:
• GMP Lakeland LLC / Lakeland Crossings Industrial — 7100 Drane Field Road, Lakeland, FL 33811
• GMP Southport LLC / Southport Logistics Park — 3200 Southport Connector Road, Jacksonville, FL 32218
• GMP Brickell LLC / Brickell Bay Office Building — 1450 Brickell Avenue, Miami, FL 33131
With respect to the Florida properties, we request the following specific endorsements in addition to the portfolio-wide endorsements set forth in Section 3:
(a) Florida Form 9 Endorsement (Comprehensive). We request the Florida Form 9 Comprehensive Endorsement for each of the three Florida properties. This is the Florida-specific equivalent of the ALTA 9.3-06 Comprehensive Endorsement and provides coverage against restrictions, encroachments, and mineral rights consistent with the coverage described in Section 3.1 above.
(b) Environmental Protection Lien Endorsement — Lakeland Crossings Industrial. As noted in Section 3.11, a de minimis REC was identified at Lakeland Crossings Industrial related to a formerly present underground storage tank. While the Florida Department of Environmental Protection issued a closure letter for this matter in 2011, we request heightened attention to the Environmental Protection Lien Endorsement for this property. Specifically, we request that Commonwealth confirm that the endorsement covers any environmental protection lien that may arise in connection with the historical underground storage tank, notwithstanding the FDEP closure letter.
(c) Florida-Specific Endorsements Under OIR Regulations. The Florida Office of Insurance Regulation ("OIR") regulates title insurance endorsements issued in the State of Florida. We request that Commonwealth identify any additional endorsements that are available under Florida OIR regulations and that would be appropriate for commercial properties of this type. In particular, we are interested in any Florida-specific endorsements addressing condominium or homeowners' association matters (relevant to the Brickell Bay Office Building, which is located in a mixed-use development that may include condominium components in adjacent parcels), as well as any endorsements addressing Florida's unique riparian or water management district requirements (potentially relevant to Southport Logistics Park and Lakeland Crossings Industrial).
C&H has engaged Palmetto Strauss PA (Roberto Strauss, Esq.) as local counsel in Florida for this Transaction. We request that Commonwealth coordinate directly with Mr. Strauss's office on any Florida-specific title matters. Mr. Strauss can be reached at (305) 555-7800 or rstrauss@palmettostrauss.com.
4.4 Tennessee Properties (3 Properties)
The following three properties are located in the State of Tennessee:
• GMP Murfreesboro LLC / Murfreesboro Distribution Center — 1600 Joe B. Jackson Parkway, Murfreesboro, TN 37127
• GMP Cool Springs LLC / Cool Springs Office Park — 5000 Virginia Way, Brentwood, TN 37027
• GMP Mount Juliet LLC / Mount Juliet Commerce Park — 400 South Mount Juliet Road, Mount Juliet, TN 37122
With respect to the Tennessee properties, we request the following specific endorsements in addition to the portfolio-wide endorsements set forth in Section 3:
(a) Tennessee-Specific Form Endorsements. We request that Commonwealth confirm the availability of each endorsement requested in Section 3 in Tennessee and identify any Tennessee-specific endorsement forms that are required or preferred in lieu of the standard ALTA forms. To the extent Tennessee title insurance regulations impose limitations on the endorsements available for commercial properties, we request Commonwealth's guidance on the appropriate alternatives.
(b) Additional Tennessee-Specific Endorsements. We request that Commonwealth identify any additional endorsements that are available under Tennessee title insurance regulations and that would be appropriate for properties of this type. In particular, we note that the Murfreesboro Distribution Center and Mount Juliet Commerce Park are both located in rapidly developing areas of the Nashville metropolitan region, and we request any available endorsements addressing matters specific to recently developed or subdivided commercial properties in Tennessee.
C&H has engaged Ellsworth Ridley LLP (Diane Ellsworth, Esq.) as local counsel in Tennessee for this Transaction. We request that Commonwealth coordinate directly with Ms. Ellsworth's office on any Tennessee-specific title matters. Ms. Ellsworth can be reached at (615) 555-2100 or dellsworth@ellsworthridley.com.
4.5 North Carolina Property (1 Property)
The following property is located in the State of North Carolina:
• GMP SouthPark LLC / SouthPark Corporate Center — 6200 Fairview Road, Charlotte, NC 28210
With respect to the North Carolina property, we request the following specific endorsements in addition to the portfolio-wide endorsements set forth in Section 3:
(a) North Carolina-Specific Endorsements. We request that Commonwealth confirm the availability of each endorsement requested in Section 3 in North Carolina and identify any North Carolina-specific endorsement forms that are required or preferred in lieu of the standard ALTA forms. The North Carolina Department of Insurance regulates title insurance endorsements issued in the state, and we request Commonwealth's guidance on any limitations or specific form requirements applicable to the endorsements requested herein.
(b) Additional North Carolina-Specific Endorsements. We request that Commonwealth identify any additional endorsements that are available under North Carolina regulations and that would be appropriate for a Class A office property of this type in the Charlotte market.
C&H has engaged Haversham Cole PLLC (Marshall Haversham, Esq.) as local counsel in North Carolina for this Transaction. We request that Commonwealth coordinate directly with Mr. Haversham's office on any North Carolina-specific title matters. Mr. Haversham can be reached at (704) 555-6300 or mhaversham@havershamcole.com.
5. Lender-Required Endorsements for Assumed Debt
As noted in Section 2 above, a significant component of the Transaction involves the assumption by Fairwater of approximately $612,000,000 in aggregate outstanding mortgage indebtedness across three existing lenders. The assumption of this indebtedness is subject to each lender's consent to the change of control of the applicable borrower entity (i.e., the transfer of 100% of the membership interests in each Target Entity from GMP Fund III to Fairwater). Lender consent is a condition to closing under the PSA.
As part of the lender consent process, each lender may require modifications or endorsements to its existing loan title insurance policy to reflect the change of ownership and guarantor. We request that Commonwealth confirm, for each lender and loan pool, whether the existing loan policies will be endorsed to reflect the change of ownership/guarantor or whether new loan policies will be required. Set forth below is a summary of the three loan pools and the applicable lender-specific information.
5.1 Pinnacle Federal Bank, N.A.
Loan Pool: Loans 1-A through 1-H
Aggregate Outstanding Principal Balance: Approximately $421,600,000
Interest Rate: 4.22% per annum, fixed
Maturity Date: July 1, 2028
Governing Agreement: Master Loan Agreement dated September 15, 2020, by and among GMP Fairfield I LLC, GMP Fairfield II LLC, GMP Westlake LLC, GMP Katy LLC, GMP Alliance LLC, GMP Lakeland LLC, GMP Southport LLC, and GMP Murfreesboro LLC, as borrowers, and Pinnacle Federal Bank, N.A., as lender (as amended from time to time)
Secured Properties: Eight (8) logistics properties — Fairfield Logistics Center I, Fairfield Logistics Center II, Westlake Distribution Hub, Katy Freeway Logistics Park, Alliance Commerce Center, Lakeland Crossings Industrial, Southport Logistics Park, and Murfreesboro Distribution Center
Lender's Counsel: Whitfield & Archer LLP (Sandra Whitfield, Esq.), 717 Texas Avenue, Suite 2500, Houston, TX 77002; telephone (713) 555-4500; swhitfield@whitfieldandarcherllp.com
Consent Fee: $1,054,000 (0.25% of aggregate OPB), payable by Buyer at closing per PSA Section 7.4(b)
We request that Commonwealth confirm whether the existing loan policies issued to Pinnacle Federal Bank, N.A. for Loans 1-A through 1-H will be endorsed to reflect the change of ownership and guarantor, or whether new loan policies will be issued. In either case, we request that Commonwealth coordinate with Pinnacle's counsel at Whitfield & Archer LLP to confirm Pinnacle's title insurance requirements in connection with the lender consent and assumption. We understand that Pinnacle may require, at a minimum, endorsements reflecting the change of guarantor, the assignment of the interest rate swap agreements, and the borrower's reaffirmation of representations and warranties.
5.2 Veltrano Capital Lending Corp.
Loan Pool: Loans 2-A through 2-D
Aggregate Outstanding Principal Balance: Approximately $142,300,000
Interest Rate: 4.68% per annum, fixed
Maturity Date: March 1, 2029
Governing Agreement: Loan Agreement dated February 1, 2021, by and among GMP Buckhead LLC, GMP SouthPark LLC, GMP Cool Springs LLC, and GMP Brickell LLC, as borrowers, and Veltrano Capital Lending Corp., as lender (as amended from time to time)
Secured Properties: Four (4) office properties — Buckhead Place Office Tower, SouthPark Corporate Center, Cool Springs Office Park, and Brickell Bay Office Building
Lender's Counsel: Cranford McCabe LLP (Leo Cranford, Esq.), 100 Southeast Second Street, Suite 3000, Miami, FL 33131; telephone (305) 555-9200; lcranford@cranfordmccabe.com
We request the same confirmation from Commonwealth regarding Veltrano's existing loan policies — specifically, whether the policies will be endorsed or reissued in connection with the change of control. We further request that Commonwealth coordinate with Veltrano's counsel at Cranford McCabe LLP to confirm Veltrano's title insurance requirements.
5.3 Sycamore Life Insurance Company
Loan Pool: Loans 3-A and 3-B