Extract to table

However, the Existing SNDA must be amended or replaced with a new instrument to address the lender-specific requirements of both Ironclad (on behalf of the Senior Lenders) and Granite Peak

However, the annual base ground rent of $4,200,000, together with the CPI escalation mechanism (which is subject to a floor but not to a cap), creates a variable expense component that must be carefully modeled into the debt service coverage ratio ("DSCR") and debt yield covenant compliance analysis for the Senior Loan

The Ground Lease provides that any material change in the permitted use of the Premises requires the prior written consent of NYCEDC and must be consistent with all applicable zoning and land use approvals

This uncapped escalation creates a variable expense risk that must be factored into the Lenders' underwriting models

Impact on Loan Covenants The ground rent payable under the Ground Lease constitutes a senior obligation that must be satisfied before debt service on the Senior Loan

Accordingly, the annual ground rent (as adjusted pursuant to the CPI escalation mechanism) must be treated as an operating expense in calculating the property's NOI for purposes of the DSCR and debt yield covenants in the Senior Loan documents