PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Douglas Fairchild, Partner, Calderwood & Harkness LLP
FROM: Cynthia Ho, Lead Associate, Real Estate Practice Group Grace Nakamura, Associate, Real Estate Practice Group
DATE: April 28, 2025
RE: Title Review — Stonebridge Parcel (62.0 Acres), Loudoun County, Virginia; Blackthorn Realty Group, Inc. (Seller) to Ironhaven Data Centers LLC (Buyer)
MATTER NO.: 1043-00002
This memorandum is a privileged and confidential attorney work product prepared in connection with Calderwood & Harkness LLP's representation of Ironhaven Data Centers LLC. This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for internal use by the Calderwood & Harkness LLP deal team and authorized representatives of Ironhaven Data Centers LLC and should not be disclosed to third parties without prior written authorization.
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I. Executive Summary
This memorandum summarizes the results of our review of the title commitment for the Stonebridge Parcel in connection with the proposed acquisition by Ironhaven Data Centers LLC ("IHDC" or the "Buyer") from Blackthorn Realty Group, Inc. ("Blackthorn" or the "Seller") of an approximately 62.0-acre parcel of unimproved land located at the northeast corner of Belmont Ridge Road and Stonebridge Boulevard, in unincorporated Loudoun County, Virginia 20148 (the "Stonebridge Parcel" or the "Property"). The acquisition is being made pursuant to the terms of that certain Purchase and Sale Agreement dated April 15, 2025 (the "PSA"), for a total purchase price of Fifty-Eight Million Five Hundred Thousand Dollars ($58,500,000).
The title commitment reviewed herein was issued by Fidelitas Title & Escrow, Inc. ("Fidelitas"), acting as issuing agent for Sovereign Title Insurance Company ("Sovereign Title"), the title underwriter, with an effective date of April 3, 2025, bearing Commitment No. FTE-2025-04-00873 (the "Commitment"). The Commitment contemplates the issuance of an ALTA Owner's Policy of Title Insurance (2021 form) in the amount of $58,500,000, insuring IHDC (or its permitted assignee) as the fee simple owner of the Property.
The Stonebridge Parcel is identified on the Loudoun County Tax Map as Reference /95-4A-1/// and is currently zoned PD-IP (Planned Development – Industrial Park). IHDC intends to file a zoning modification ("ZMOD") application for data center use on or before May 30, 2025, which is expected to be docketed as ZMOD-2025-0038 before the Loudoun County Board of Supervisors. Following acquisition and entitlement, IHDC plans to develop the Stonebridge Data Center Campus, consisting of four data center buildings (Buildings A through D) with a total electrical capacity of approximately 96 megawatts ("MW"), together with supporting infrastructure including a central utility plant, generator yards, fiber interconnection facilities, and associated parking and site improvements.
This memorandum identifies and analyzes each of the Schedule B-II exceptions set forth in the Commitment, classifying each as either a permitted exception, an objectionable exception requiring cure, or an exception requiring further review before a final determination can be made. For each exception, we provide an assessment of the potential impact on the proposed development and recommend specific curative actions to be requested from Blackthorn through its counsel, Whitfield, Poole & Stratton LLP ("WPS"), attention Harrison Poole, Esq.
Overall Assessment: Based on our review, title to the Stonebridge Parcel is insurable, subject to standard exceptions and a number of special exceptions that require cure, endorsement, or further evaluation before the targeted closing date of September 15, 2025. The most significant issues requiring attention are: (a) the release and satisfaction of an existing deed of trust securing indebtedness to Crestmont Savings Bank, N.A. in the approximate original principal amount of $22,000,000; (b) a detailed review of the Declaration of Covenants, Conditions, and Restrictions applicable to the Property for compatibility with data center use; (c) evaluation of several recorded easements against the proposed campus site plan upon receipt of the ALTA/NSPS survey; and (d) research into a potential mineral rights reservation identified in the chain of title. Several of these items must be resolved before the expiration of the due diligence period under the PSA on July 14, 2025.
We note for the record that the Property will ultimately be conveyed to Stonebridge Campus Holdings LLC, a to-be-formed Virginia limited liability company and single-purpose borrower entity wholly owned by IHDC ("Borrower SPE"), either through a direct conveyance at closing or, more likely, through the execution of an Assignment and Assumption of the PSA from IHDC to the Borrower SPE prior to closing. In connection with the construction financing for the Stonebridge Data Center Campus, a separate lender's title insurance policy in the amount of Three Hundred Ninety Million Dollars ($390,000,000) will be required by the construction loan syndicate led by Summit National Bank, N.A. ("Summit"), as Administrative Agent. The lender's policy requirements will be addressed in a supplemental memorandum upon receipt of the loan commitment letter and draft loan documents from Redmond & Calloway LLP, lender's counsel.
II. Title Commitment Overview
A. Commitment Identification
We have reviewed the following title commitment, together with the schedules and attachments thereto:
A copy of the Commitment is attached hereto as Exhibit A.
Lender's Policy Note: In addition to the owner's policy described above, a separate lender's title insurance policy will be required in connection with the construction loan closing. The construction loan syndicate, led by Summit National Bank, N.A. as Administrative Agent, will require an ALTA Lender's Policy of Title Insurance (2021 form) in the amount of $390,000,000, representing the full facility amount of the construction loan. The syndicate participants include Summit (commitment of $180,000,000), Cascade Commercial Lending Corp. ($130,000,000, contact David Rennick), and Harborview Trust Company ($80,000,000, contact Susan Applegategate). Lender's counsel is Redmond & Calloway LLP (Victor Redmond, Esq.), located at 8300 Greensboro Drive, Suite 1100, McLean, Virginia 22102. We anticipate receiving the loan commitment letter, referenced as CL-2025-VA-04418, on or about August 1, 2025, and will prepare a supplemental memorandum addressing lender's title insurance requirements at that time. Fidelitas has been advised of the need for both an owner's and a lender's policy, and Sovereign Title has preliminarily confirmed its capacity to underwrite both policies.
B. Schedule A — Description of Estate
Schedule A of the Commitment identifies the estate to be insured as follows:
Fee Simple Title Vested In: Blackthorn Realty Group, Inc., a Virginia corporation
Legal Description: The Property is described by metes and bounds in Schedule A of the Commitment, referencing Loudoun County Tax Map /95-4A-1///, and comprising approximately 62.0 acres. The legal description recites courses and distances around the perimeter of the parcel, beginning at a point on the northeasterly right-of-way line of Belmont Ridge Road (Virginia Route 659), thence proceeding in a generally clockwise direction, and closing at the point of beginning. The legal description references several prior recorded plats and subdivision instruments as the source of the boundary description.
Survey Verification: The legal description set forth in the Commitment has not yet been verified against an independent survey. An ALTA/NSPS Land Title Survey is currently being prepared by Lumen Ridge Engineering, PLLC, under the direction of Carlos Esteban, PE, with a targeted completion date of June 15, 2025. Upon receipt of the survey, we will compare the metes and bounds description in the Commitment against the surveyor's field measurements and computed area to confirm accuracy and consistency. Any discrepancies in acreage, boundary calls, or monumentation will be identified in a separate survey review memorandum. It is essential that the legal description ultimately used in the special warranty deed match the surveyed description, and we recommend that the survey-based legal description be substituted into the Commitment and closing documents if any material variance is identified.
Address / Location: The Property is located at the northeast corner of Belmont Ridge Road (Virginia Route 659) and Stonebridge Boulevard, Ashburn, Virginia 20148, in unincorporated Loudoun County. The parcel has frontage on both Belmont Ridge Road (along its western boundary) and Stonebridge Boulevard (along its southern boundary). Access to the Property is available from both roads, with the primary entrance planned off Stonebridge Boulevard, consistent with the anticipated VDOT access permit requirements.
Acreage Confirmation: The Commitment states the approximate area of the Property as 62.0 acres. This is consistent with the acreage stated in the PSA and the per-acre purchase price computation ($58,500,000 ÷ 62.0 acres = approximately $943,548.39 per acre). We will verify this acreage against the ALTA survey upon completion. We note that any right-of-way dedications or road widening reservations (see Exception No. 7 below) may reduce the net developable acreage, and the PSA should be reviewed to confirm whether the purchase price is subject to adjustment for any reduction in acreage below 62.0 acres.
C. Schedule B-I — Requirements
Schedule B-I of the Commitment sets forth the requirements that must be satisfied prior to the issuance of the owner's title insurance policy. We have reviewed each requirement and provide the following summary of status and responsible parties:
1. Payment of Premium. The title insurance premium for the owner's policy must be paid at closing. The premium amount has not yet been confirmed by Fidelitas and will depend on the final policy amount and any endorsements requested. We have requested that Fidelitas provide a premium quotation, including endorsement premiums, at its earliest convenience. The PSA allocates responsibility for the owner's policy premium to the Buyer. The premium for the lender's policy will also be paid at closing and is typically the responsibility of the Buyer/Borrower under the construction loan documents. Status: To be satisfied at closing.
2. Execution and Recording of Deed. Fidelitas requires the execution and recording of a deed conveying fee simple title from Blackthorn Realty Group, Inc. to the insured party. Pursuant to the PSA, Blackthorn is obligated to deliver a Special Warranty Deed (with English covenants of title) at closing. The deed will be prepared by Calderwood & Harkness LLP and will convey title to Stonebridge Campus Holdings LLC (the Borrower SPE), assuming the PSA is assigned to the Borrower SPE prior to closing, or to IHDC if the assignment has not yet been completed. The deed will be recorded in the Loudoun County Circuit Court Clerk's Office upon closing. Status: To be satisfied at closing. Responsible party: C&H (preparation); Blackthorn/WPS (execution).
3. Payment of All Real Estate Taxes and Assessments Current Through Closing. All real estate taxes and assessments levied against the Property must be current as of the closing date, with no delinquencies. Under the PSA, Blackthorn is responsible for all taxes accruing prior to the closing date, and taxes will be prorated between the Seller and Buyer as of the closing date based on the most recent available tax bills. Proration calculations will be reflected on the settlement statement. We will confirm current and delinquent tax status with the Loudoun County Treasurer's Office and the Commissioner of Revenue prior to closing. Status: To be confirmed; proration at closing. Responsible party: Blackthorn (pre-closing); proration per settlement statement.
4. Release of Existing Deeds of Trust / Mortgages. If any deeds of trust, mortgages, or other monetary liens encumber the Property, they must be released and satisfied at or prior to closing. As discussed in detail in Section III.B, Exception No. 1, a deed of trust in favor of Crestmont Savings Bank, N.A. currently encumbers the Property. This lien must be paid off and released at closing. Status: Cure required. Responsible party: Blackthorn/WPS. See Exception No. 1 analysis below.
5. Evidence of Authority. Fidelitas requires satisfactory evidence that the individual executing conveyance documents on behalf of Blackthorn Realty Group, Inc. has the authority to do so. Based on our review of the PSA and discussions with WPS, we understand that Donald R. Whitaker, President of Blackthorn, will execute the deed and ancillary closing documents on behalf of the Seller. We have requested that WPS provide a Secretary's Certificate or certified copy of a resolution of the Board of Directors of Blackthorn authorizing Mr. Whitaker to execute and deliver the deed and all related closing documents, together with an incumbency certificate confirming his current status as President. Status: Pending delivery by WPS. Responsible party: Blackthorn/WPS.
6. Evidence of Good Standing. Fidelitas requires satisfactory evidence that Blackthorn Realty Group, Inc. is a corporation in good standing under the laws of the Commonwealth of Virginia. Blackthorn is a Virginia corporation, Virginia State Corporation Commission ("SCC") Entity ID 0412876-3. We have confirmed that Blackthorn is currently listed as "active" in the Virginia SCC database; however, a Certificate of Good Standing dated not more than thirty (30) days prior to the closing date will be required. We have requested that WPS obtain and deliver a current Certificate of Good Standing from the Virginia SCC prior to closing. Status: Pending. Responsible party: Blackthorn/WPS.
7. Mechanic's Lien Affidavit. The Seller must provide an affidavit confirming that no work has been performed on the Property, and no materials have been furnished to the Property, within the statutory period that would give rise to a mechanic's lien claim under Virginia Code § 43-1 et seq. Given that the Property is currently unimproved, we do not anticipate that this requirement will present any difficulty, but the affidavit must nonetheless be obtained. We note that under Virginia law, a mechanic's lien may be perfected up to ninety (90) days after the last day of the month in which the work was completed or materials were furnished. Seller's affidavit should cover any work performed within at least 120 days prior to the closing date to provide adequate comfort to the title company. Status: To be delivered at closing. Responsible party: Blackthorn/WPS.
8. Satisfactory ALTA Survey. Fidelitas requires a current ALTA/NSPS Land Title Survey of the Property, prepared in accordance with the 2021 Minimum Standard Detail Requirements, and including such Table A items as Fidelitas may require for deletion of the standard survey exception and issuance of survey-related endorsements. As noted above, the survey is being prepared by Lumen Ridge Engineering, PLLC (Carlos Esteban, PE), with a target completion date of June 15, 2025. Upon completion, the survey must be certified to IHDC, the Borrower SPE, Calderwood & Harkness LLP, Fidelitas Title & Escrow, Inc., Sovereign Title Insurance Company, Summit National Bank, N.A. (as Administrative Agent), and Redmond & Calloway LLP. We have communicated the required certification parties to Lumen Ridge Engineering. Status: In progress; target completion June 15, 2025. Responsible party: Lumen Ridge Engineering (preparation); C&H (review).
9. Transfer Tax Compliance. All applicable transfer and recordation taxes must be computed and paid in connection with the recording of the deed. Under Virginia law, the following taxes will apply:
(a) Virginia Grantor's Tax: Virginia Code § 58.1-801 imposes a state grantor's tax at the rate of $0.50 per $500 (or fraction thereof) of consideration, which equates to $0.001 per dollar. Based on the $58,500,000 purchase price, the estimated state grantor's tax is $58,500.00. This is the Seller's obligation under the PSA and Virginia law.
(b) Loudoun County Recordation Tax / Local Grantor's Tax: Loudoun County imposes a local recordation tax and/or grantor's tax in addition to the state levy. The combined local rate is approximately $0.0833 per $100 of consideration, plus applicable Loudoun County congestion relief fees. The exact amount will be confirmed with the Clerk's Office prior to closing.
(c) State Recordation Tax: Virginia Code § 58.1-803 imposes a state recordation tax at the rate of $0.25 per $100 (or fraction thereof) of consideration on the recording of the deed. Based on the $58,500,000 purchase price, the estimated state recordation tax is approximately $146,250.00. The PSA should be reviewed to confirm allocation of recordation tax between the parties.
Status: To be computed and paid at closing. Responsible party: Fidelitas (computation); Seller/Buyer per PSA allocation.
III. Schedule B-II — Exceptions to Title
A. Standard / Preprinted Exceptions
The Commitment contains the following standard preprinted exceptions that are customarily included in ALTA Owner's Policies prior to the issuance of extended coverage. We recommend that IHDC request an extended coverage owner's policy (ALTA 2021 form) with deletion of all standard preprinted exceptions, subject to delivery of the required affidavits, survey, and closing documentation. A similar deletion will be required for the lender's policy.
Standard Exception 1: Rights or Claims of Parties in Possession Not Shown by Public Records.
This exception protects the title insurer against claims by parties in possession of the Property whose interests are not reflected in the public land records — for example, tenants under unrecorded leases or adverse possessors. Based on our understanding that the Stonebridge Parcel is currently unimproved and unoccupied agricultural land, we do not anticipate that any parties are in possession of the Property. We recommend that Fidelitas delete this exception upon receipt of an owner's affidavit from Blackthorn at closing, confirming that no parties other than the Seller are in possession of the Property and that there are no unrecorded leases, tenancies, or occupancy agreements affecting the Property. This is standard practice for commercial transactions of this nature.
Standard Exception 2: Encroachments, Overlaps, Boundary Line Disputes, or Other Matters That Would Be Disclosed by an Accurate Survey.
This exception will be deleted or modified upon receipt and review of the ALTA/NSPS Land Title Survey being prepared by Lumen Ridge Engineering, PLLC. We anticipate that the survey will be completed on or about June 15, 2025. Upon Fidelitas's review and approval of the survey, this exception should be replaced with a specific exception for any matters actually shown on the survey, if any, and otherwise deleted. We will request an ALTA 25 endorsement (Same as Survey) to be issued in conjunction with the deletion of this exception, confirming that the legal description in the policy corresponds to the surveyed boundaries.
Standard Exception 3: Easements or Claims of Easements Not Shown by Public Records.
This exception protects against unrecorded easements, such as prescriptive easements, implied easements, or easements by necessity. We recommend deletion of this exception upon receipt of the owner's affidavit from Blackthorn, in which the Seller will represent that it is not aware of any unrecorded easements affecting the Property and that no party has claimed a prescriptive right to use any portion of the Property. The ALTA survey will also assist in identifying any visible evidence of unrecorded easement use (e.g., worn paths, utility installations not corresponding to recorded easements).
Standard Exception 4: Mechanic's Lien Claims.
This exception protects against mechanic's lien claims arising from work performed or materials furnished to the Property. As noted above, the Property is currently unimproved, and the Seller will provide a mechanic's lien affidavit at closing confirming that no work has been performed and no materials have been furnished within the statutory lien period. Upon receipt of the affidavit, Fidelitas should delete this exception. We note that IHDC should not commence any site work (including geotechnical investigations, surveying, or tree clearing) on the Property prior to closing without first coordinating with Fidelitas, as commencement of work could trigger mechanic's lien exposure and complicate the deletion of this exception.
Standard Exception 5: Real Property Taxes and Assessments Not Yet Due and Payable.
This is a standard exception that remains in virtually all title insurance policies. Real property taxes for the current fiscal year that are not yet due and payable are excepted from coverage, as they constitute a lien that is imposed by operation of law and is not yet a delinquent obligation. This exception is acceptable and will remain in the policy. Taxes will be prorated between the Seller and Buyer at closing in accordance with the PSA terms and reflected on the settlement statement.
Standard Exception 6: Any Lien for Unpaid Estate, Inheritance, or Gift Taxes.
This exception protects against liens arising from unpaid estate, inheritance, or gift taxes that may encumber the Property by reason of the death of a prior owner or by operation of federal or state tax law. Since the current record owner is a Virginia corporation (Blackthorn Realty Group, Inc.) and not a natural person, this exception is of limited practical relevance. Nonetheless, we recommend requesting deletion of this exception or, alternatively, requesting a limiting endorsement confirming that no such liens are known to affect the Property. Fidelitas should be able to accommodate this request based on the Seller's affidavit and a review of the chain of title.
Recommendation: We recommend that IHDC request Fidelitas to issue an extended coverage owner's policy (ALTA 2021 form) deleting all six standard preprinted exceptions enumerated above, conditioned upon (i) delivery and approval of the ALTA/NSPS survey, (ii) receipt of an owner's affidavit from Blackthorn in customary form, and (iii) compliance with all other Schedule B-I requirements. An identical deletion of standard exceptions will be required for the lender's policy to be issued in connection with the construction loan closing.
B. Special Exceptions — Recorded Documents and Encumbrances
The Commitment lists ten special exceptions in Schedule B-II, representing specific recorded instruments, liens, and other matters affecting the Property. We have analyzed each exception and provide our classification, assessment, and recommendations below.
Exception No. 1: Existing Deed of Trust. Description: Deed of Trust from Blackthorn Realty Group, Inc. to Robert M. Langford and Sandra K. Prescott, as Trustees, for the benefit of Crestmont Savings Bank, N.A., recorded in the Loudoun County Circuit Court Clerk's Office as Instrument No. 20190412-0023456, dated April 12, 2019, securing an original principal indebtedness in the amount of Twenty-Two Million Dollars ($22,000,000.00), together with all modifications, amendments, extensions, and renewals thereof.
Analysis: This deed of trust constitutes a first-priority monetary lien on the Stonebridge Parcel and must be released and satisfied at or prior to closing. Under Section 8.2(c) of the PSA, the Seller is obligated to deliver fee simple title to the Property at closing free and clear of all monetary liens and encumbrances other than the permitted exceptions specifically enumerated in the PSA. The existing deed of trust in favor of Crestmont Savings Bank, N.A. is not a permitted exception under the PSA and must therefore be removed from title as a condition of closing.
We have not yet received information regarding the current outstanding principal balance, accrued interest, or any prepayment penalties or defeasance costs associated with this loan. We understand from preliminary discussions with WPS that Blackthorn intends to pay off the Crestmont loan from the sale proceeds at closing, but formal confirmation of this arrangement has not been obtained. It is critical that a payoff letter from Crestmont Savings Bank, N.A. be obtained well in advance of the closing date to confirm the exact payoff amount, per diem interest, and any fees or charges, and to ensure that Crestmont will deliver a recordable release or certificate of satisfaction upon receipt of the payoff funds.
Recommendation: This is an objectionable exception requiring cure. We recommend the following actions:
(a) Include this item in the title objection letter to be sent to Harrison Poole at WPS, requiring Blackthorn to arrange for the payoff and release of the Crestmont deed of trust at or prior to closing.
(b) Request that WPS obtain and deliver to C&H a payoff letter from Crestmont Savings Bank, N.A. no later than thirty (30) days prior to the targeted closing date, confirming the payoff amount, per diem interest, wire instructions, and lender's commitment to deliver a recordable release of the deed of trust upon receipt of payoff funds.
(c) At closing, Fidelitas will be responsible for escrowing the payoff funds and disbursing them directly to Crestmont, and for obtaining and recording the release or certificate of satisfaction in the Loudoun County Circuit Court Clerk's Office.
(d) Include this item on the pre-closing checklist and monitor the status of the payoff throughout the pre-closing period.
Classification: Objectionable — Cure Required.
Exception No. 2: Real Estate Tax Lien (Current Year). Description: Lien for real estate taxes for the tax year 2025, levied by Loudoun County, not yet delinquent, in the amount and as assessed by the Loudoun County Commissioner of Revenue.
Analysis: This is a standard exception that appears in virtually all title commitments for Virginia properties. Under Virginia law, real estate taxes constitute a lien on the property from the date of assessment, regardless of whether they are yet due and payable. For the tax year 2025, the first half installment is typically due on June 5, and the second half installment is due on December 5. The PSA provides for proration of real estate taxes between the Seller and Buyer as of the closing date (September 15, 2025), based on the most recent available tax bills. The Seller is responsible for all taxes allocable to the period prior to the closing date, and the Buyer is responsible for taxes allocable to the period from and after the closing date.
We note that the Property is currently assessed as unimproved agricultural/vacant land, and the current annual tax levy reflects this assessment. Upon acquisition and development of the Stonebridge Data Center Campus, the assessed value — and therefore the annual tax burden — will increase substantially. However, any reassessment that may occur after closing is not a title matter and does not affect the insurability of title.
Recommendation: This exception is a permitted exception under the PSA, subject to proration of taxes at closing. We recommend the following confirmatory steps:
(a) Confirm with the Loudoun County Treasurer's Office that all prior-year taxes have been paid in full and that there are no delinquent taxes, penalties, or interest accrued against the Property.
(b) Obtain the current tax assessment and tax bill from the Loudoun County Commissioner of Revenue to facilitate preparation of the tax proration on the settlement statement.
(c) Confirm whether any special assessments (e.g., service district assessments, road improvement assessments, or stormwater utility charges) are levied against the Property in addition to general ad valorem real estate taxes.
Classification: Permitted Exception (subject to proration at closing).
Exception No. 3: Utility Easement — Electric. Description: Easement granted by Dominion Fields Development Corporation (a predecessor in title) to Virginia Rural Electric Cooperative (now known as Vantage Power Cooperative), recorded in the Loudoun County Circuit Court Clerk's Office as Instrument No. 20040623-0018742, dated June 23, 2004, granting a perpetual, non-exclusive easement twenty feet (20') in width for the installation, operation, maintenance, repair, replacement, and removal of overhead and/or underground electric transmission and distribution lines, poles, towers, anchors, guys, wires, cables, conduits, transformers, and related appurtenances, said easement affecting a strip of land along the western boundary of the Property, with the centerline of the easement located approximately ten feet (10') from the westerly property line.
Analysis: Utility easements for electric service are common and expected for parcels of this size and location. The critical question is whether the location of this easement — a twenty-foot strip along the western boundary of the Property — conflicts with any planned building footprints, access drives, generator yards, or other critical improvements in the Stonebridge Data Center Campus site plan.
Based on our preliminary review of the conceptual site plan prepared by Kestrel Infrastructure Advisors (Diane Prescott), the western boundary of the Property fronts on Belmont Ridge Road, and the planned campus layout situates the primary building footprints (Buildings A through D) in the central and eastern portions of the site, with landscaping and buffer areas along the western and southern perimeters. Accordingly, a twenty-foot easement strip along the western boundary may not directly conflict with the planned building footprints. However, this must be confirmed once the ALTA survey locates the easement and the detailed site plan is finalized.
We also note that IHDC is separately negotiating a substation easement on the adjacent Meridian Parcel (Tax Map /95-4A-2///) in favor of Vantage Power Cooperative for the construction and operation of a dedicated 230kV/34.5kV electrical substation to serve the Stonebridge Data Center Campus. The existing easement on the Stonebridge Parcel may need to be amended or supplemented to accommodate the routing of electrical feeders from the substation to the campus's main electrical switchgear, including any new underground duct banks or overhead lines that cross the Stonebridge Parcel.
Recommendation: This exception requires further review before a final determination can be made. We recommend the following:
(a) Obtain a complete copy of the recorded easement instrument (Instrument No. 20040623-0018742) from the Loudoun County Circuit Court Clerk's Office or from Fidelitas.
(b) Upon receipt of the ALTA survey from Lumen Ridge Engineering, verify the location and dimensions of the easement strip and identify any improvements, encroachments, or proposed structures within or near the easement area.
(c) Coordinate with Carlos Esteban, PE (Lumen Ridge Engineering) and Diane Prescott (Kestrel Infrastructure Advisors) to confirm that the easement location does not conflict with the campus site plan, including building pads, generator yards, fire lanes, and utility corridors.
(d) If the easement area needs to be relocated, expanded, or otherwise modified to accommodate campus utility routing or if the existing easement interferes with planned improvements, initiate negotiations with Vantage Power Cooperative to amend the easement.
(e) Evaluate whether the existing easement can be leveraged to facilitate the electrical infrastructure serving the campus, potentially reducing the need for additional easements.
Classification: Potentially Permitted Exception — Further Review Required.
Exception No. 4: Utility Easement — Water/Sewer. Description: Easement granted by Blackthorn Realty Group, Inc. to Loudoun Water (formally known as the Loudoun County Sanitation Authority), recorded in the Loudoun County Circuit Court Clerk's Office as Instrument No. 20110318-0009821, dated March 18, 2011, granting a perpetual, exclusive easement thirty feet (30') in width for the installation, operation, maintenance, repair, replacement, and removal of water transmission mains, sanitary sewer force mains and gravity mains, and related appurtenances including manholes, cleanouts, valves, hydrants, and connections, said easement affecting a corridor running generally east-west through the southern portion of the Property, approximately one hundred fifty feet (150') north of the Stonebridge Boulevard right-of-way line.
Analysis: Water and sanitary sewer easements in favor of the local utility authority are typical and expected for parcels of this size and zoning classification. Loudoun Water is the public water and sewer provider for this area of Loudoun County, and the existence of existing water and sewer infrastructure in the vicinity of the Property is a significant advantage for the proposed data center development, which will require substantial water service for cooling systems and fire suppression, as well as sanitary sewer service for building occupants.
The key concern is whether the thirty-foot easement corridor through the southern portion of the Property conflicts with planned building pads, parking areas, stormwater management facilities, or other critical site improvements. Based on the conceptual site plan, the southern portion of the Property is planned for surface parking, a stormwater management pond, and landscape buffers, with Building A located farther north. Accordingly, the water/sewer easement corridor may be compatible with the planned site layout, but this must be confirmed once the survey and detailed engineering plans are available.
We also note that data center developments typically require significant water service for evaporative cooling towers and fire suppression systems, and IHDC may need to install additional water mains and sewer laterals connecting to the infrastructure within the existing easement corridor. Any new connections will require coordination with Loudoun Water and may necessitate additional easement grants or amendments to the existing easement.
Recommendation: This exception requires further review before a final determination can be made. We recommend:
(a) Obtain a complete copy of the recorded easement instrument (Instrument No. 20110318-0009821) from the Loudoun County Circuit Court Clerk's Office or from Fidelitas.
(b) Upon receipt of the ALTA survey, confirm the location and dimensions of the easement corridor, identify the location of existing water and sewer infrastructure within the easement, and overlay the easement boundaries on the campus site plan.
(c) Coordinate with Lumen Ridge Engineering and the project's mechanical/plumbing engineer to determine whether existing water/sewer infrastructure is adequate for the campus or whether upgrades and extensions will be required.
(d) If the easement corridor conflicts with any planned improvements, evaluate options for relocation or encroachment agreements with Loudoun Water.
Classification: Potentially Permitted Exception — Further Review Required.
Exception No. 5: Drainage / Stormwater Easement. Description: Drainage easement granted by Dominion Fields Development Corporation (predecessor in title) to Oakbridge Industrial Park Property Owners' Association, Inc., recorded in the Loudoun County Circuit Court Clerk's Office as Instrument No. 20050901-0024133, dated September 1, 2005, granting a perpetual, non-exclusive easement for the flow and passage of stormwater drainage and related facilities, said easement affecting a portion of the northeast corner of the Property, approximately 1.8 acres in area, as shown on the plat recorded as Instrument No. 20050901-0024134.
Analysis: This drainage easement presents a potentially significant concern for the proposed development. The northeast corner of the Property is the planned location for Building D in the campus master plan — the fourth and final data center building in the phased development program. Building D is contemplated as an approximately 250,000 gross-square-foot facility with a planned electrical capacity of 24 MW. If the 1.8-acre drainage easement area in the northeast corner of the Property encumbers all or a substantial portion of the planned Building D footprint, it could materially impair the development program and reduce the campus's total electrical capacity below the target of 96 MW.
Additionally, we note that a campus-wide stormwater management facility easement and maintenance agreement will need to be established for the entire 81.4-acre campus (comprising both the Stonebridge Parcel and the adjacent Meridian Parcel) as a condition of Loudoun County site plan approval. The existing drainage easement may need to be integrated into the campus-wide stormwater management plan, and the terms of the existing easement — including the identity and rights of the benefited parties (Oakbridge Industrial Park Property Owners' Association, Inc.) — must be carefully evaluated to determine whether modification, relocation, or vacation of the easement is feasible.
Recommendation: This exception is potentially objectionable and requires prompt attention. We recommend the following:
(a) Obtain complete copies of both the recorded easement instrument (Instrument No. 20050901-0024133) and the associated easement plat (Instrument No. 20050901-0024134) from the Loudoun County Circuit Court Clerk's Office or from Fidelitas.
(b) Upon receipt of the ALTA survey, precisely locate the easement boundaries and overlay them on the Building D footprint and campus site plan to quantify the extent of the conflict, if any.
(c) Coordinate with the civil engineer (Lumen Ridge Engineering, Carlos Esteban, PE) and land use consultant (Cornerstone Land Use Consulting, Alan Mercer) to evaluate whether Building D can be relocated or reconfigured to avoid the easement area, or whether the campus-wide stormwater management plan can be redesigned to incorporate the existing drainage easement without requiring its vacation.
(d) If the easement must be relocated or vacated to accommodate Building D, initiate negotiations with Oakbridge Industrial Park Property Owners' Association, Inc. to obtain a release, amendment, or relocation of the easement. This may require providing alternative drainage facilities or compensating the Association for any increased stormwater burden on other portions of the industrial park.
(e) This item should be resolved, or a path to resolution identified, before the expiration of the due diligence period on July 14, 2025, to preserve IHDC's right to terminate the PSA if a satisfactory resolution cannot be achieved.
Classification: Potentially Objectionable — Further Review Required.
Exception No. 6: Restrictive Covenants / Declaration of Covenants, Conditions, and Restrictions. Description: Declaration of Covenants, Conditions, and Restrictions for Oakbridge Industrial Park, recorded in the Loudoun County Circuit Court Clerk's Office as Instrument No. 20020815-0015067, dated August 15, 2002, and recorded by Dominion Fields Development Corporation, as Declarant, together with the First Amendment to Declaration of Covenants, Conditions, and Restrictions recorded as Instrument No. 20080422-0012398, dated April 22, 2008, and the Second Amendment to Declaration of Covenants, Conditions, and Restrictions recorded as Instrument No. 20140610-0019456, dated June 10, 2014 (collectively, the "CC&Rs"), imposing use restrictions, architectural review requirements, setback standards, landscaping requirements, building height limitations, noise limitations, and assessment obligations applicable to all parcels within the Oakbridge Industrial Park planned development area.
Analysis: The CC&Rs represent the single most critical title exception requiring detailed review. Data center developments have unique operational characteristics that may conflict with covenants originally designed for conventional industrial park uses, and any prohibition or material restriction on data center use, generator installations, mechanical equipment, or 24/7 operations could fundamentally impair IHDC's ability to develop the Stonebridge Data Center Campus as planned.
The following specific areas of potential concern must be evaluated through a detailed review of the CC&Rs:
(a) Permitted Uses. The CC&Rs may define or limit the types of uses permitted on parcels within the industrial park. If the CC&Rs limit permitted uses to specific categories of light industrial, manufacturing, warehouse, or office uses without including data centers or technology infrastructure, IHDC may need to obtain an amendment to the CC&Rs or a specific use waiver from the Declarant or the Oakbridge Industrial Park Property Owners' Association. We note that the separate zoning analysis (PD-IP zoning and the forthcoming ZMOD application) addresses governmental land use regulation; the CC&Rs represent private land use restrictions that operate independently of the zoning ordinance and are enforceable by private parties regardless of zoning approval.
(b) Architectural Review. Many industrial park CC&Rs establish an architectural review committee ("ARC") with the authority to review and approve (or reject) proposed building designs, materials, colors, signage, and site improvements. If the CC&Rs vest the ARC with discretionary approval authority, IHDC must determine whether the ARC process can be navigated on a timeline consistent with the development schedule and whether the ARC's aesthetic preferences are compatible with data center building design (which typically features large, windowless structures with extensive mechanical equipment and security fencing). If the ARC has unrestricted veto authority, this could represent a significant risk to the project.
(c) Height Restrictions. Data center buildings in the Stonebridge campus are currently designed at approximately 45 feet in height to accommodate raised floor systems, overhead cable trays, and rooftop mechanical equipment. Generator enclosures and exhaust stacks may extend to 55 feet or more. If the CC&Rs impose height limits below these levels, modifications or variances will be required.
(d) Noise Limitations. Data center campuses generate significant noise from cooling equipment, generators (during testing and emergency operations), and other mechanical systems. The CC&Rs may impose maximum noise levels at property boundaries or at adjacent parcels. If such limitations are set below typical data center operational noise levels, IHDC may need to negotiate amendments, install additional noise mitigation measures, or both.
(e) Generator and Mechanical Equipment Restrictions. Some industrial park CC&Rs restrict the installation of outdoor mechanical equipment, fuel storage facilities, or backup generators, or require that such equipment be screened or enclosed. Data center campuses typically include extensive generator farms with dozens of diesel or natural gas generators and associated fuel storage tanks. Any prohibition or significant restriction on generator installations could be a fatal flaw for the development program.
(f) Assessment Obligations. The CC&Rs may impose annual assessments on property owners within the industrial park for maintenance of common areas, landscaping, signage, and other shared amenities. IHDC must evaluate the current assessment rates, any special assessments that may be levied, and any escalation provisions to ensure that assessment obligations are commercially reasonable and do not impose an undue burden on the campus operations budget.
Recommendation: This exception is potentially objectionable and constitutes a high-priority curative item. We strongly recommend the following:
(a) Obtain complete copies of the CC&Rs, including all amendments, from the Loudoun County Circuit Court Clerk's Office or from Fidelitas. We have requested these instruments and will circulate them to the development team immediately upon receipt.
(b) Conduct a detailed review of the CC&Rs, with particular attention to the issues identified above (permitted uses, architectural review, height limits, noise limits, generator/equipment restrictions, and assessments). This review should involve Thomas Ashcroft of Ashcroft & Wynn (land use counsel) and Alan Mercer of Cornerstone Land Use Consulting, in addition to our office.
(c) If the CC&Rs contain restrictions that are inconsistent with the proposed data center campus, promptly engage with the Declarant (Dominion Fields Development Corporation or its successor) and/or the Oakbridge Industrial Park Property Owners' Association to negotiate amendments, waivers, or variances. This process may require approval from a supermajority of property owners within the industrial park, depending on the amendment provisions in the CC&Rs.
(d) Consider whether IHDC should request that Blackthorn, as the current owner and presumably a member of the Property Owners' Association, initiate the amendment process prior to closing to facilitate any required approvals.
(e) This item must be resolved, or a definitive path to resolution established, before the expiration of the due diligence period on July 14, 2025. If the CC&Rs contain restrictions that cannot be amended or waived and that would materially impair the data center development, IHDC should evaluate whether to exercise its termination rights under the PSA.
(f) Request that Fidelitas include an ALTA 9 endorsement (Comprehensive — Restrictions, Encroachments, Minerals) in the owner's policy, which would provide affirmative insurance against loss arising from a violation of the CC&Rs disclosed in the Commitment, subject to the terms and limitations of the endorsement.
Classification: Potentially Objectionable — Detailed Review and Possible Cure Required.
Exception No. 7: Road Widening / Right-of-Way Reservation. Description: Right-of-way reservation and dedication along the western boundary of the Property (Belmont Ridge Road / Virginia Route 659), recorded in the Loudoun County Circuit Court Clerk's Office as Instrument No. 20030212-0004567, dated February 12, 2003, in favor of the Virginia Department of Transportation ("VDOT"), reserving a strip of land approximately twenty-five feet (25') in width along the entire Belmont Ridge Road frontage of the Property for future road widening and improvement purposes. Additionally, a similar right-of-way reservation along the southern boundary of the Property (Stonebridge Boulevard), as shown on the recorded subdivision plat (Instrument No. 20020815-0015068), reserving a strip approximately fifteen feet (15') in width for future boulevard improvements.
Analysis: Road widening reservations and right-of-way dedications are common in Loudoun County, particularly along major arterial roadways such as Belmont Ridge Road, which has been identified in the Loudoun County Comprehensive Plan and the Countywide Transportation Plan for future widening. Stonebridge Boulevard is a local collector road that may also be subject to future widening requirements as the surrounding area develops.
The primary impact of these reservations is a reduction in the net developable acreage of the Property. A twenty-five-foot strip along the entire Belmont Ridge Road frontage (approximately 2,700 linear feet, estimated based on parcel dimensions) would remove approximately 1.55 acres from the buildable area, and a fifteen-foot strip along the Stonebridge Boulevard frontage (approximately 2,000 linear feet, estimated) would remove approximately 0.69 acres. Together, these reservations could reduce the developable area by approximately 2.24 acres, leaving approximately 59.76 acres net developable. This reduction should be evaluated against the PSA to determine whether the purchase price is subject to adjustment for any reduction in acreage.
Additionally, the road widening reservations may affect the required setback distances from the right-of-way lines, as setbacks under the PD-IP zoning district and the CC&Rs are typically measured from the ultimate (widened) right-of-way line rather than the current right-of-way line. This could further reduce the buildable area along the western and southern perimeters.
Recommendation: This exception is likely a permitted exception for a commercial development of this nature, provided the reservations do not materially reduce the buildable area below what is required for the campus master plan. We recommend:
(a) Obtain the recorded instruments referenced above, including the dedication deed and the subdivision plat, to confirm the precise dimensions and location of the right-of-way reservations.
(b) Upon receipt of the ALTA survey, confirm the width, location, and area of the reservations and identify the ultimate right-of-way lines from which setbacks will be measured.
(c) Coordinate with Cornerstone Land Use Consulting (Alan Mercer) and Ashcroft & Wynn (Thomas Ashcroft) to confirm the setback requirements applicable under both the PD-IP zoning ordinance and the ZMOD application, measured from the ultimate right-of-way lines.
(d) Evaluate the impact of the reservations on the campus site plan and confirm that the planned building footprints, parking areas, and utility infrastructure are all outside the reserved right-of-way areas and in compliance with applicable setback requirements.
(e) Determine whether IHDC will have any proffer obligations for transportation improvements along Belmont Ridge Road or Stonebridge Boulevard in connection with the ZMOD application, and if so, coordinate those obligations with the existing right-of-way reservations.
Classification: Likely Permitted Exception — Confirm on Survey.
Exception No. 8: Mineral Rights Reservation. Description: Reservation of all coal, oil, gas, and other minerals in and under the Property, together with the right of ingress and egress for the purpose of mining, drilling, and extracting such minerals, as reserved in the deed from Piedmont Land & Timber Company to Dominion Fields Development Corporation, recorded in the Loudoun County Circuit Court Clerk's Office as Instrument No. 19871015-0006234, dated October 15, 1987.
Analysis: The reservation of mineral rights in a prior conveyance in the chain of title is a matter of significant concern for a data center development. Data centers require extensive below-grade infrastructure, including deep foundations (in some cases, drilled piers or caissons extending 30 feet or more below grade), underground utility vaults, fiber optic conduit networks, grounding systems, and stormwater management infrastructure. If a third party holds mineral rights with the right of surface entry, the exercise of those rights could cause catastrophic damage to the data center campus, including foundation disruption, utility severance, and operational interruption.
Virginia law has historically permitted the severance of mineral rights from the surface estate, and mineral rights holders may in some circumstances have the right to use the surface to the extent reasonably necessary to extract minerals. While the practical likelihood of active mining or drilling on a parcel in the Ashburn area of Loudoun County is extremely low — this area is characterized by suburban and commercial development, not mining or energy extraction — the existence of the reservation nonetheless constitutes a cloud on title that could affect both the insurability of the owner's and lender's policies and the marketability of the Property for the intended use.
We have not yet determined whether Piedmont Land & Timber Company, the entity that reserved the mineral rights in 1987, is still in existence, or whether the mineral rights have been subsequently conveyed, assigned, or abandoned. A thorough chain of title analysis focused specifically on the mineral rights is required.
Recommendation: This exception is potentially objectionable and requires further research. We recommend:
(a) Engage Fidelitas to conduct a focused chain of title search to trace the ownership of the reserved mineral rights from Piedmont Land & Timber Company to the present, identifying any subsequent conveyances, assignments, or releases of the mineral interest.
(b) Determine whether Piedmont Land & Timber Company is still an active entity. Search the Virginia SCC records, and if the entity has been dissolved, research whether its assets (including the mineral reservation) were distributed or abandoned. If the entity is defunct and no successor can be identified, this may simplify the path to clearing the exception.
(c) If the mineral rights holder can be identified, attempt to acquire a quitclaim deed or release of the mineral reservation, or at minimum, a waiver of the right of surface entry. Depending on the commercial circumstances, this may involve a negotiated purchase of the mineral rights.
(d) Request that Sovereign Title issue an ALTA 35-series endorsement (Mineral Rights) to the owner's and lender's policies, insuring against loss or damage arising from the exercise of mineral rights, including surface entry rights. Sovereign Title may require additional underwriting review and may impose additional premium charges for this endorsement.
(e) This item should be resolved before the expiration of the due diligence period on July 14, 2025, or at minimum, a satisfactory endorsement from Sovereign Title should be confirmed as obtainable before that date.
Classification: Potentially Objectionable — Research and Possible Cure Required.
Exception No. 9: Plat Notes and Subdivision Conditions. Description: Various plat notes and conditions of approval shown on the recorded subdivision plat for Oakbridge Industrial Park, recorded in the Loudoun County Circuit Court Clerk's Office as Instrument No. 20020815-0015068, dated August 15, 2002, and on the subsequent resubdivision plat recorded as Instrument No. 20070305-0008456, dated March 5, 2007, including but not limited to: (i) minimum building setback lines (front: 50 feet from ultimate right-of-way; side: 25 feet; rear: 25 feet); (ii) maximum lot coverage of 60%; (iii) designation of a 2.5-acre open space area in the southeastern portion of the Property as "Common Open Space — Not to be Developed"; (iv) requirement for phased development in accordance with the approved Concept Development Plan; and (v) notation that all development is subject to final site plan approval by the Loudoun County Department of Building and Development.
Analysis: Plat notes and conditions of approval recorded on the subdivision plat run with the land and are binding on subsequent property owners. These conditions reflect the terms under which the original subdivision was approved by Loudoun County and may impose limitations that differ from, or are more restrictive than, the current provisions of the Loudoun County Zoning Ordinance.
The following plat conditions are of particular relevance to the proposed development:
(a) Setback Lines. The fifty-foot front setback from the ultimate right-of-way and twenty-five-foot side and rear setbacks must be evaluated against the campus site plan to confirm that all planned buildings, generator enclosures, and other structures are in compliance. When combined with the road widening reservations (Exception No. 7), the effective setback from the current property lines along Belmont Ridge Road and Stonebridge Boulevard may be as much as 75 feet (25-foot right-of-way reservation plus 50-foot setback), which could significantly constrain building placement along the western and southern edges of the Property.
(b) Maximum Lot Coverage. The sixty percent (60%) maximum lot coverage limitation means that no more than approximately 37.2 acres (60% of 62.0 acres) can be covered by buildings, structures, and impervious surfaces. The data center campus, which includes four large building footprints, generator yards, parking areas, access roads, and a central utility plant, may approach or exceed this threshold. The civil engineer should calculate the anticipated impervious coverage and confirm compliance. If coverage exceeds 60%, IHDC may need to seek a modification through the ZMOD process.
(c) Common Open Space Designation. The designation of a 2.5-acre area in the southeastern portion of the Property as "Common Open Space — Not to be Developed" represents a permanent restriction on approximately 4% of the Property's total area. This area cannot be used for buildings, parking, or other development and must be maintained as open space. The campus site plan should account for this restriction.
(d) Phased Development. The requirement for phased development in accordance with the approved Concept Development Plan may affect IHDC's ability to develop the campus in its preferred sequence or to obtain site plan approvals for all four buildings simultaneously. This condition should be reviewed in conjunction with the ZMOD application strategy.
Recommendation: This exception is potentially permitted, subject to confirmation of compatibility with the campus development program and the ZMOD application. We recommend:
(a) Obtain the recorded subdivision plats (Instrument Nos. 20020815-0015068 and 20070305-0008456) and review all plat notes and conditions in detail.
(b) Cross-reference the plat conditions with the campus site plan from Lumen Ridge Engineering and the entitlement strategy from Cornerstone Land Use Consulting to confirm compliance with setback, coverage, open space, and phasing requirements.
(c) If any plat conditions conflict with the proposed development, coordinate with Ashcroft & Wynn (Thomas Ashcroft) to determine whether those conditions can be modified or superseded through the ZMOD application process. In some cases, a ZMOD approval may effectively amend or replace prior plat conditions, but this must be confirmed with Loudoun County planning staff.
(d) Ensure that the ZMOD application, which is targeted for filing by May 30, 2025, addresses any plat conditions that are inconsistent with the proposed campus design.
Classification: Potentially Permitted — Subject to ZMOD.
Exception No. 10: Judgment / Tax Liens Against Seller. Description: Title search conducted against Blackthorn Realty Group, Inc. (Virginia SCC Entity ID 0412876-3; EIN 54-1987234) in the records of the Loudoun County Circuit Court, the United States District Court for the Eastern District of Virginia, and the applicable federal and state tax lien indices.
Analysis: The title search conducted by Fidelitas did not reveal any outstanding judgments, federal tax liens, state tax liens, or other involuntary liens recorded against Blackthorn Realty Group, Inc. as of the effective date of the Commitment (April 3, 2025). However, this is a point-in-time determination, and additional liens could be filed against Blackthorn between the effective date and the closing date. A bring-down search will be required immediately prior to closing to confirm that no new liens have been filed.
We note that under Virginia law, a federal tax lien attaches to all property and rights to property of the taxpayer upon assessment, but is not valid against a bona fide purchaser, holder of a security interest, mechanic's lien claimant, or judgment lien creditor until a notice of federal tax lien is filed in the appropriate recording office. Similarly, state tax liens must be duly recorded to be effective against subsequent purchasers. The bring-down search prior to closing will capture any liens filed after the effective date.
Additionally, the Seller will be required to provide a FIRPTA affidavit (or evidence of FIRPTA withhold