Substitution of Property. 20.1 Substitution of Property for the Leased Property. ------------------------------------------------ (a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided that no Event of Default shall have occurred and be continuing, Lessee shall have the right (subject to the conditions set forth below in this Article 20, and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor. (b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease. (c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860. (d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment"). (e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors. (f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
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Sources: Lease Agreement (Emeritus Corp\wa\), Lease Agreement (Emeritus Corp\wa\)
Substitution of Property. 20.1 Substitution of Property for the Leased Property1SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY. ------------------------------------------------
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided Provided that no Event of Default shall have has occurred and be continuingunder this Lease (excluding any Event of Default which has been waived, in writing, by the Lessor), nor any event which, with the giving of notice or the passage of time or both, would constitute such an Event of Default, Lessee shall have the right from time to time (subject referred to herein as the conditions set forth below in this Article 20"Substitution Right"), and exercisable upon not less than ninety (90) days' prior written notice to Lessor) to substitute one or more properties Lessor (collectively referred to as "Substitute Properties" or individually herein as a "Substitute PropertySubstitution Notice") for the Leased Property to substitute, on a monthly Payment Date date specified in such notice Substitution Notice (such date, as the same may be extended by express written agreement of lessor, shall be referred to herein as a "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary), any other substitution for the Leased Property shall require with a Comparable Facility. As used herein, the prior written consent of Lessor which term "Comparable Facility" shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution defined as a result of damage, destruction health care facility or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnationfacilities which Lessor determines (a) and as reasonably projected over the remaining Term of this Lease and shall have a has an appraised Fair Market Value substantially equivalent greater than or equal to the Fair Market Value greater of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the appraised Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Conversion Date or (or in ii) the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said appraised Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution that the applicable Substitution Notice is furnished to Lessor (i.e.based on appraisal criteria then in effect), annual return on its investment in such Substitute Property(b) not less has a Facility Debt Coverage Ratio greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price greater of (i) the Facility Debt Coverage Ratio of the Leased Property on as of the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) abovesecond anniversary of the Conversion Date, or (ii) decreased by the Facility Debt Coverage Ratio of the Leased Property at the time that the applicable Substitution Notice is furnished to Lessor, (c) provides a mix of services similar to the Leased Property and (d) is otherwise reasonably acceptable, in all respects, to Lessor (based on Lessor's usual and customary property evaluation criteria then in effect). Lessee may not exercise its Substitution Right more than once in any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) abovecalendar year.
Appears in 1 contract
Substitution of Property. 20.1 Borrowers may from time to time provide substitute real property collateral (the “Substituted Property”) for any real property Collateral; provided that for each such substitution (a “Property Substitution”) the following conditions are satisfied with respect to such Property Substitution of Property for and the Leased applicable Substituted Property. ------------------------------------------------:
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 no Default or Article 19, and provided that no Event of Default shall have has occurred and be continuing, Lessee shall have the right (subject is continuing both before and after giving effect to the conditions set forth below in this Article 20, and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased such Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.Substitution;
(b) If Lessee gives the notice referred Flexibility Conditions are satisfied as of the date of and both before and immediately after giving effect to such Property Substitution;
(c) the applicable Substituted Property is free and clear of all Liens other than Liens described in Section 20.1(aclauses (a), (b) aboveand (e) of the definition of Permitted Liens;
(d) Agent shall have received an appraisal (in form and substance and by an appraiser reasonably satisfactory to Agent) for the applicable Substituted Property (the “Substituted Property Appraisal”), Lessee shall present dated no more than six (6) months prior to Lessor one or more properties the date of such Property Substitution;
(or groups e) the appraised value of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e.the applicable Substituted Property, an annual return on its equity as set forth in such property) the Substituted Property Appraisal be equal to or greater than the Current Yield (and the yield value, as reasonably expected to be received thereafter throughout the remainder determined by Agent, of the termportion of the Collateral being replaced (the “Replaced Property”);
(f) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and Agent shall have received each of the following:
(i) a Fair Market Value fully executed Mortgage (the “Substituted Property Mortgage”) with respect to each parcel of the Substituted Property, in substantially equivalent the form of the Mortgages delivered as of the Closing Date, with such modifications thereto as shall be advisable with respect to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within local jurisdictions in which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or located;
(ii) purchase an ALTA extended coverage title policy or policies, in form and substance and in amounts and with such endorsements as are reasonably acceptable to the Leased Agent, with respect to each Substituted Property Mortgage;
(iii) duly executed UCC-3 Termination Statements or such other instruments or evidence, in form and substance satisfactory to the Agent, as shall be necessary to terminate and satisfy all Liens, if any, on the Substituted Property; and
(iv) to the extent reasonably requested by the Agent or the Majority Lenders, environmental audits, surveys, title reports and any other document reasonably requested by the Agent, the Majority Lenders or any Lender, as applicable, with respect to the Substituted Property; and
(v) opinions of counsel for the Minimum Purchase Price with either such election Borrower which is the owner of the Substituted Property as the Agent shall reasonably request, in a form, scope and substance reasonably satisfactory to be in accordance with the provisions of this Lease.Agent and its counsel;
(cg) It Borrowers shall be have paid all reasonable costs related to such Property Substitution, including, but not limited to, reasonable attorney’s fees or fees related to appraisers, and consultants, filing fees and the cost of ALTA extended coverage title policies for the Substituted Property required above, in connection with any request for Property Substitution, and as a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, Borrowers shall have provided evidence to Agent that Borrowers have paid, or made arrangement satisfactory to Agent for the payment of, all such costs which became due and payable prior to or concurrently with such Property Substitution; and
(h) Borrowers shall execute such other documents and agreements as Agent may require to encumber the delivery of an opinion of counsel for Lessor confirming that (i) Substituted Property and amend the substitution Loan Documents to reflect the replacement of the Substitute Property for the Leased Replaced Property. Upon a substitution of Substituted Property will qualify as an exchange solely pursuant to the provisions of property of alike-kind under this Section 1031 2.8, all Liens on the Replaced Property in favor of the CodeAgent for the benefit of itself and the Lenders shall be released and the Lenders hereby authorize the Agent to execute such documents and take such further action as reasonably requested by the Borrowers or determined by the Agent, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code furtherance of this Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-8602.8.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Substitution of Property. 20.1 Substitution Subject to the terms and conditions ------------------------ set forth in this Section 2.7, Borrower may obtain a release of the Lien of a Mortgage (and the related Loan Documents) encumbering an Individual Property for (a "SUBSTITUTED PROPERTY") by substituting therefor another automobile dealership property acquired by Borrower (individually, a "SUBSTITUTE PROPERTY" and collectively, the Leased Property. ------------------------------------------------"SUBSTITUTE PROPERTY"), provided that any such substitution shall be subject, in each case, to the satisfaction of the following conditions precedent:
(a) In All of the event Lessor accepts an offer by Lessee to substitute other property Individual Properties released during the term of the Loan shall represent in the aggregate not more than twenty-five percent (25%) of the aggregate Net Operating Income of all of the Properties for the Leased twelve (12) month period immediately preceding the Closing Date and for the twelve (12) month period immediately preceding the date of substitution.
(b) Such substitution shall not be allowed more than three (3) times during the term of the Loan.
(c) Borrower shall have delivered reasonable evidence establishing that an environmental condition exists at the Substituted Property such that the potential liability to Guarantor under Article 13the Recourse Guaranty and/or the Environmental Indemnity exceeds Two Hundred Fifty Thousand and No/100 Dollars ($250,000).
(d) Lender shall have received a copy of a deed conveying all of Borrower's right, Article 14 title and interest in and to the Substituted Property to an entity other than Borrower and a letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed or Article 19assignment and assumption, as applicable, and provided agreeing to record such deed or assignment and assumption, as applicable, in the real estate records for the county in which the Substituted Property is located.
(e) Lender shall have received an appraisal of the Substitute Property dated no more than sixty (60) days prior to the substitution by an appraiser acceptable to the Rating Agencies, indicating an appraised value of the Substitute Property that no is equal to or greater than the value of the Substituted Property determined by Lender at the time of the encumbrance of the Substituted Property by the related Mortgage at or about the Closing Date.
(f) After giving effect to the substitution, the Debt Service Coverage Ratio for the Loan for all of the Properties (including the Substitute Property but excluding the Substituted Property) is not less than the Debt Service Coverage Ratio for the Loan for all of the Properties (including the Substituted Property but excluding the Substitute Property) as of the Closing Date and as of the date immediately preceding the substitution.
(g) The Net Operating Income for the Substitute Property either (i) does not show a downward trend over the three (3) years immediately prior to the date of substitution or (ii) with respect to a Substitute Property for which information regarding the Net Operating Income of such Substitute Property for the three (3) years immediately prior to the date of substitution cannot be obtained by Borrower after Borrower's exercise of diligent efforts, the Net Operating Income shall not show a downward trend for such period of time immediately prior to the date of substitution as may be determined from the information regarding such Net Operating Income available or (iii) if the Substitute Property has been the subject of a new triple net Lease executed within such three (3) year period, the Net Operating Income shall not show a downward trend for the period, not less than twelve (12) months, since the execution of said Lease.
(h) The Net Operating Income and Property Specific Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the Substitute Property immediately after such substitution is greater than one hundred ten percent (110%) of the Net Operating Income and Property Specific Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the related Substituted Property immediately prior to such substitution.
(i) Lender shall have received confirmation in writing from the Rating Agencies to the effect that such substitution will not result in a withdrawal, qualification or downgrade of the respective ratings in effect immediately prior to such substitution for the Securities issued in connection with the Securitization that are then outstanding.
(j) No material Default or Event of Default shall have occurred and be continuing, Lessee continuing and Borrower shall have the right (subject to the be in compliance in all material respects with all terms and conditions set forth below in this Article 20Agreement and in each Loan Document on Borrower's part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified warranties of Borrower contained in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution this Agreement and the proposed Substitution Date. Notwithstanding anything contained herein other Loan Documents are true and correct in all material respects on and as of the date of the substitution with respect to Borrower, the contrary, Properties and the Substitute Property and containing any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred representations and warranties with respect to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or CondemnationBorrower, the Current Yield immediately prior to such damageProperties, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action the Loan as the Rating Agencies may require, such certificate to divest or otherwise dispose of be in form and substance satisfactory to the Leased Property within a shorter time periodRating Agencies.
(k) Borrower shall have executed, the time period shall be shortened appropriately acknowledged and delivered to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer Lender (i) a Mortgage, an Assignment of Leases and two UCC Financing Statements with respect to substitute additional property the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Mortgage, Assignment of Leases and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Mortgage, Assignment of Leases and Rents and one of the UCC-1 Financing Statements in the real estate records for the county in which the Substitute Property is located and to file one of the UCC-1 Financing Statement in the office of the Secretary of State of the state in which the Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable Liens upon the Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied and an Environmental Indemnity with respect to the Substitute Property. The Mortgage, Assignment of Leases, UCC-1 Financing Statements and Environmental Indemnity shall be the same in form and substance as the counterparts of such substitution, documents executed and delivered with respect to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of related Substituted Property subject to modifications reflecting the Substitute Property for as the Leased Individual Property will qualify as an exchange solely that is the subject of property of alike-kind under Section 1031 such documents and such modifications reflecting the laws of the Code, state in which, generally, except for "boot" which the Substitute Property is located as shall be recommended by the counsel admitted to practice in such state and delivering the opinion as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor enforceability of such documents required pursuant to Code Section 1245 or 1250 or any other Code provisionclause (q) below. The Mortgage encumbering the Substitute Property shall secure all amounts evidenced by the Note, (iii) the substitution will result provided that in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or group similar tax and does not permit the allocation of Substitute Properties (i.e.indebtedness for the purpose of determining the amount of such tax payable, the Fair Market Value principal amount secured by such Mortgage shall be equal to one hundred fifty percent (150%) of the amount of the Loan allocated to the Substitute Property. The amount of the Loan allocated to, and the Release Amount of, the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash AdjustmentSUBSTITUTE RELEASE AMOUNT")) shall equal the Release Amount of the related Substituted Property.
(el) The Rent for such Lender shall have received (A) any "tie-in" or similar endorsement to each Title Insurance Policy insuring the Lien of an existing Mortgage as of the date of the substitution available with respect to the Title Insurance Policy insuring the Lien of the Mortgage with respect to the Substitute Property in all respects shall provide Lessor with and (B) a yield at Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the time Lien of such substitution (i.e., annual return on its investment in such the Mortgage encumbering the Substitute Property) not less than , issued by the Current Yield (and title company that issued the yield reasonably expected to be received thereafter throughout Title Insurance Policies insuring the remainder Lien of the Term) from existing Mortgages and dated as of the Leased Property prior date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the Lien of the Mortgage encumbering the Substituted Property. The Title Insurance Policy issued with respect to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property shall (1) provide coverage in the amount of the Substitute Release Amount if the "tie-in" or Substitute Properties shall be similar endorsement described above is available or, if such endorsement is not available, in an amount equal to the Minimum Purchase Price one hundred fifty percent (150%) of the Leased Property Substitute Release Amount, (2) insure Lender that the relevant Mortgage creates a valid first lien on the Substitution Date Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (ias modified by the terms of any endorsements), (3) increased contain such endorsements and affirmative coverages as are contained in the Title Insurance Policies insuring the Liens of the existing Mortgages, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.
(m) Lender shall have received a current title survey for each Substitute Property, certified to the title company and Lender and their successors and assigns, in the same form and having the same content as the certification of the Survey of the Substituted Property prepared by a professional land surveyor licensed in the state in which the Substitute Property is located and acceptable to the Rating Agencies in accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property. The surveyor's seal shall be affixed to each survey and each survey shall certify that (A) no material Improvements on the surveyed property are relocated in an area designated as Flood Zone A or Flood Zone V by the Federal Emergency Management Administration, in which case such property shall be covered by the flood insurance as provided in Section ------- 5.1. ---
(n) Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an Individual Property hereunder have been satisfied with respect to the Substitute Property and evidence of the payment of all premiums payable for the existing policy period.
(o) Lender shall have received a Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report, which conclude that the Substitute Property does not contain any Cash Adjustment paid Hazardous Substance (as defined in the Mortgage), other than as is permitted under the Loan Documents, is not subject to any risk of contamination from any off-site Hazardous Substance and does not require any remedial actions with respect to Hazardous Substances.
(p) Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Lessor Borrower of all organizational documentation related to Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender in connection with the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction) and (C) resolutions of Borrower authorizing the substitution and any actions taken in connection with such substitution.
(q) Lender shall have received the following opinions of Borrower's counsel:
(A) an opinion or opinions of counsel admitted to practice under the laws of the state in which the Substitute Property is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to Section 20.1(dclause (k) aboveabove are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors' rights and equitable principles, and that Borrower is qualified to do business and in good standing under the laws of the jurisdiction where the Substitute Property is located or that Borrower is not required by applicable law to qualify to do business in such jurisdiction; (B) an opinion of Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ or such other counsel acceptable to the Rating Agencies stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (j) above were duly authorized, executed and delivered by Borrower and that the execution and delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will not cause a breach of, or (ii) decreased by a default under, any Cash Adjustment paid by Lessee pursuant agreement, document or instrument to Section 20.1(d) above.which Borrower is a party or to which it or its properties are bound;
Appears in 1 contract
Substitution of Property. 20.1 Substitution Subject to the terms and ------------------------ conditions set forth in this Section 2.7, Borrower may obtain a release of the Lien of a Mortgage (and the related Loan Documents) encumbering an Individual Property for (a "SUBSTITUTED PROPERTY") by substituting therefor another automobile dealership property acquired by Borrower (individually, a "SUBSTITUTE PROPERTY" and collectively, the Leased Property. ------------------------------------------------"SUBSTITUTE PROPERTY"), provided that any such substitution shall be subject, in each case, to the satisfaction of the following conditions precedent:
(a) In All of the event Lessor accepts an offer by Lessee to substitute other property Individual Properties released during the term of the Loan shall represent in the aggregate not more than twenty-five percent (25%) of the aggregate Net Operating Income of all of the Properties for the Leased twelve (12) month period immediately preceding the Closing Date and for the twelve (12) month period immediately preceding the date of substitution.
(b) Such substitution shall not be allowed more than three (3) times during the term of the Loan.
(c) Borrower shall have delivered reasonable evidence establishing that an environmental condition exists at the Substituted Property such that the potential liability to Guarantor under Article 13the Recourse Guaranty and/or the Environmental Indemnity exceeds Two Hundred Fifty Thousand and No/100 Dollars ($250,000).
(d) Lender shall have received a copy of a deed conveying all of Borrower's right, Article 14 title and interest in and to the Substituted Property to an entity other than Borrower and a letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed or Article 19assignment and assumption, as applicable, and provided agreeing to record such deed or assignment and assumption, as applicable, in the real estate records for the county in which the Substituted Property is located.
(e) Lender shall have received an appraisal of the Substitute Property dated no more than sixty (60) days prior to the substitution by an appraiser acceptable to the Rating Agencies, indicating an appraised value of the Substitute Property that no is equal to or greater than the value of the Substituted Property determined by Lender at the time of the encumbrance of the Substituted Property by the related Mortgage at or about the Closing Date.
(f) After giving effect to the substitution, the Debt Service Coverage Ratio for the Loan for all of the Properties (including the Substitute Property but excluding the Substituted Property) is not less than the Debt Service Coverage Ratio for the Loan for all of the Properties (including the Substituted Property but excluding the Substitute Property) as of the Closing Date and as of the date immediately preceding the substitution.
(g) The Net Operating Income for the Substitute Property either (i) does not show a downward trend over the three (3) years immediately prior to the date of substitution or (ii) with respect to a Substitute Property for which information regarding the Net Operating Income of such Substitute Property for the three (3) years immediately prior to the date of substitution cannot be obtained by Borrower after Borrower's exercise of diligent efforts, the Net Operating Income shall not show a downward trend for such period of time immediately prior to the date of substitution as may be determined from the information regarding such Net Operating Income available or (iii) if the Substitute Property has been the subject of a new triple net Lease executed within such three (3) year period, the Net Operating Income shall not show a downward trend for the period, not less than twelve (12) months, since the execution of said Lease.
(h) The Net Operating Income and Property Specific Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the Substitute Property immediately after such substitution is greater than one hundred ten percent (110%) of the Net Operating Income and Property Specific Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the related Substituted Property immediately prior to such substitution.
(i) Lender shall have received confirmation in writing from the Rating Agencies to the effect that such substitution will not result in a withdrawal, qualification or downgrade of the respective ratings in effect immediately prior to such substitution for the Securities issued in connection with the Securitization that are then outstanding.
(j) No material Default or Event of Default shall have occurred and be continuing, Lessee continuing and Borrower shall have the right (subject to the be in compliance in all material respects with all terms and conditions set forth below in this Article 20Agreement and in each Loan Document on Borrower's part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified warranties of Borrower contained in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution this Agreement and the proposed Substitution Date. Notwithstanding anything contained herein other Loan Documents are true and correct in all material respects on and as of the date of the substitution with respect to Borrower, the contrary, Properties and the Substitute Property and containing any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred representations and warranties with respect to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or CondemnationBorrower, the Current Yield immediately prior to such damageProperties, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action the Loan as the Rating Agencies may require, such certificate to divest or otherwise dispose of be in form and substance satisfactory to the Leased Property within a shorter time periodRating Agencies.
(k) Borrower shall have executed, the time period shall be shortened appropriately acknowledged and delivered to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer Lender (i) a Mortgage, an Assignment of Leases and two UCC Financing Statements with respect to substitute additional property the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Mortgage, Assignment of Leases and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Mortgage, Assignment of Leases and Rents and one of the UCC-1 Financing Statements in the real estate records for the county in which the Substitute Property is located and to file one of the UCC-1 Financing Statement in the office of the Secretary of State of the state in which the Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable Liens upon the Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied and an Environmental Indemnity with respect to the Substitute Property. The Mortgage, Assignment of Leases, UCC-1 Financing Statements and Environmental Indemnity shall be the same in form and substance as the counterparts of such substitution, documents executed and delivered with respect to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of related Substituted Property subject to modifications reflecting the Substitute Property for as the Leased Individual Property will qualify as an exchange solely that is the subject of property of alike-kind under Section 1031 such documents and such modifications reflecting the laws of the Code, state in which, generally, except for "boot" which the Substitute Property is located as shall be recommended by the counsel admitted to practice in such state and delivering the opinion as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor enforceability of such documents required pursuant to Code Section 1245 or 1250 or any other Code provisionclause (q) below. The Mortgage encumbering the Substitute Property shall secure all amounts evidenced by the Note, (iii) the substitution will result provided that in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or group similar tax and does not permit the allocation of Substitute Properties (i.e.indebtedness for the purpose of determining the amount of such tax payable, the Fair Market Value principal amount secured by such Mortgage shall be equal to one hundred fifty percent (150%) of the amount of the Loan allocated to the Substitute Property. The amount of the Loan allocated to, and the Release Amount of, the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash AdjustmentSUBSTITUTE RELEASE AMOUNT")) shall equal the Release Amount of the related Substituted Property.
(el) The Rent for such Lender shall have received (A) any "tie-in" or similar endorsement to each Title Insurance Policy insuring the Lien of an existing Mortgage as of the date of the substitution available with respect to the Title Insurance Policy insuring the Lien of the Mortgage with respect to the Substitute Property in all respects shall provide Lessor with and (B) a yield at Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the time Lien of such substitution (i.e., annual return on its investment in such the Mortgage encumbering the Substitute Property) not less than , issued by the Current Yield (and title company that issued the yield reasonably expected to be received thereafter throughout Title Insurance Policies insuring the remainder Lien of the Term) from existing Mortgages and dated as of the Leased Property prior date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the Lien of the Mortgage encumbering the Substituted Property. The Title Insurance Policy issued with respect to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property shall (1) provide coverage in the amount of the Substitute Release Amount if the "tie-in" or Substitute Properties shall be similar endorsement described above is available or, if such endorsement is not available, in an amount equal to the Minimum Purchase Price one hundred fifty percent (150%) of the Leased Property Substitute Release Amount, (2) insure Lender that the relevant Mortgage creates a valid first lien on the Substitution Date Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are contained in the Title Insurance Policies insuring the Liens of the existing Mortgages, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.
(m) Lender shall have received a current title survey for each Substitute Property, certified to the title company and Lender and their successors and assigns, in the same form and having the same content as the certification of the Survey of the Substituted Property prepared by a professional land surveyor licensed in the state in which the Substitute Property is located and acceptable to the Rating Agencies in accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property. The surveyor's seal shall be affixed to each survey and each survey shall certify that (A) no material Improvements on the surveyed property are relocated in an area designated as Flood Zone A or Flood Zone V by the Federal Emergency Management Administration or (B) material Improvements on the surveyed property are located in an area designated as Flood Zone A or Flood Zone V by the Federal Emergency Management Administration, in which case such property shall be covered by the flood insurance as provided in Section ------- 5.1. ---
(n) Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an Individual Property hereunder have been satisfied with respect to the Substitute Property and evidence of the payment of all premiums payable for the existing policy period.
(o) Lender shall have received a Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report, which conclude that the Substitute Property does not contain any Hazardous Substance (as defined in the Mortgage), other than as is permitted under the Loan Documents, is not subject to any risk of contamination from any off-site Hazardous Substance and does not require any remedial actions with respect to Hazardous Substances.
(p) Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Borrower of all organizational documentation related to Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender in connection with the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction) and (C) resolutions of Borrower authorizing the substitution and any actions taken in connection with such substitution.
(q) Lender shall have received the following opinions of Borrower's counsel:
(A) an opinion or opinions of counsel admitted to practice under the laws of the state in which the Substitute Property is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (k) above are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors' rights and equitable principles, and that Borrower is qualified to do business and in good standing under the laws of the jurisdiction where the Substitute Property is located or that Borrower is not required by applicable law to qualify to do business in such jurisdiction; (B) an opinion of Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ or such other counsel acceptable to the Rating Agencies stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (j) above were duly authorized, executed and delivered by Borrower and that the execution and delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will not cause a breach of, or a default under, any agreement, document or instrument to which Borrower is a party or to which it or its properties are bound; (C) an opinion of counsel acceptable to the Rating Agencies stating that subjecting the Substitute Property to the Lien of the related Mortgage and the execution and delivery of the related Loan Documents does not and will not affect or impair the ability of Lender to enforce its remedies under all of the Loan Documents or to realize the benefits of the cross- collateralization provided for thereunder; (D) an update of the Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein; (E) an opinion of counsel acceptable to the Rating Agencies stating that the substitution and the related transactions do not constitute a fraudulent conveyance under applicable bankruptcy and insolvency laws and (F) an opinion of counsel acceptable to the Rating Agencies that the substitution does not constitute a "significant modification" of the Loan under Section 1001 of the Code or otherwise cause a tax to be imposed on a "prohibited transaction" by any REMIC Trust.
(r) Borrower shall have paid, or caused to be paid, all Basic Carrying Costs relating to the Properties and the Substitute Property, including without limitation, (i) increased by any Cash Adjustment paid by Lessor pursuant accrued but unpaid insurance premiums relating to Section 20.1(d) abovethe Properties and the Substitute Property, or (ii) decreased currently due Taxes (including any in arrears) relating to the Properties and the Substitute Property and (iii) currently due Other Charges relating to the Properties and Substitute Property.
(s) Borrower shall have paid or reimbursed Lender for all costs and expenses incurred by Lender (including, without limitation, reasonable attorneys fees and disbursements) in connection with the substitution and Borrower shall have paid all recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution. Borrower shall have paid or caused to be paid all costs and expenses of the Rating Agencies incurred in connection with the substitution.
(t) Lender shall have received annual operating statements and occupancy statements for the Substitute Property for the most current completed fiscal year and a current operating statement for the Substituted Property, each certified to Lender as being true and correct and a certificate from Borrower certifying that there has been no material adverse change in the financial condition of the Substitute Property since the date of such operating statements.
(u) Borrower shall have delivered to Lender estoppel certificates from any Cash Adjustment paid by Lessee pursuant to Section 20.1(dexisting tenants (A) above.constituting anchor tenants at the Substitute Property, (B) leasing an entire building at the Subst
Appears in 1 contract
Substitution of Property. 20.1 Substitution of Notwithstanding anything to the contrary contained herein, including Sections 1.5, 4.2 and 4.3 hereof, Borrower may substitute a Property for (each, a “Specified Property”) with a substitute Eligible Property (each, a “Substitute Property”) provided that the Leased Property. ------------------------------------------------following conditions are satisfied:
(a) In each substitute Eligible Property shall be a residential real property of a similar property type as the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13Substitute Property, Article 14 or Article 19, but excluding housing cooperatives and provided that manufactured housing;
(b) no Event of Default or Trigger Period shall have occurred and be continuing;
(c) Lender shall have obtained, Lessee at Borrower’s sole cost and expense, an appraisal for the Substitute Property and the Specified Property and based on such appraisal, the Substitute Property shall have the right same or greater “as is” value as the greater of (subject x) the “as is” value of the Specified Property as of the Closing Date and (y) the “as is” value of the Specified Property at the time of substitution;
(d) Lender shall have completed at Borrower’s sole cost and expense, an inspection of the Substitute Property, and Lender shall be satisfied with the results thereof;
(e) Borrower shall deliver to Lender an Officer’s Certificate stating that each Substitute Property is an Eligible Property on the date of the substitution after giving effect to the conditions set forth below substitution;
(f) The Substitute Property must be occupied by an unrelated tenant meeting Lender’s underwriting criteria pursuant to a Lease which shall have a remaining contractual term of at least six (6) months (without giving effect to any extension option in this Article 20such Lease);
(g) the in place Rents under the Lease for the Substitute Property shall be equal to or greater than the greater of (A) the in place Rents under the Lease for the Specified Property measured as of the time of substitution (assuming such Specified Property is leased at market rent even if it is not leased at market rent or not leased) and (B) the in place Rents under the Lease for the Specified Property measured as of the Closing Date;
(h) the net operating income for the Substitute Property shall be equal to or greater than the greater of (A) the net operating income of the Specified Property measured as of the time of substitution (assuming such Specified Property is leased at market rent even if it is not leased at market rent or not leased) and (B) the net operating income of the Specified Property measured as of the Closing Date;
(i) simultaneously with the substitution, Borrower shall convey all of Borrower’s right, title and interest in, to and under the Specified Property to a Person other than Sponsor and Borrower shall deliver to Lender a copy of the deed conveying all or Borrower’s right, title and interest in the Specified Property;
(j) Borrower shall deliver on or prior to the date of substitution evidence satisfactory to Lender that each Substitute Property is insured pursuant to Policies meeting the requirements of Section 4.1;
(k) Borrower shall deliver to Lender the deed in the name of Borrower, owner’s title insurance policy which evidences clean and marketable title vesting in the name of Borrower and the Lease with respect to the Substitute Property;
(l) Borrower shall have executed and delivered to Lender, a Mortgage with respect to the Substitute Property, which shall be in substantially the same form as the Mortgage executed and/or delivered on the Closing Date with such changes as may be necessitated or appropriate (as reasonably determined by Lender) for the jurisdiction in which the Substitute Property is located, and upon notice which may, in Lender’s discretion, be a Mortgage with respect to Lessor) to substitute only such Substitute Property (and in the event the Substitute Property is located in the same county or parish in which one or more properties other Properties (collectively referred to as "Substitute Properties" or individually as a "Substitute other than the Specified Property") for the Leased Property on a monthly Payment Date specified in is located, such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall Mortgage may be in the form of an Officer's Certificate amendment and spreader agreement to the existing Mortgage covering such Property or Properties located in the same county or parish as the Substitute Property, in each case, in form and substance reasonably acceptable to Lender) (the “Substitute Mortgage Documents”);
(m) Borrower shall deliver to Lender the following opinions of counsel in Lender’s standard form or, in Lender’s discretion if a similar opinion was not provided on the Closing Date, other evidence satisfactory to Lender regarding the following: (A) an opinion of counsel admitted to practice under the laws of the state in which the Substitute Property (or Substitute Properties, if a portfolio of Specified Properties are being substituted) is located in form and substance reasonably satisfactory to Lender opining as to the enforceability of the Substitute Mortgage Documents with respect to the Substitute Property and (B) an opinion stating that the Substitute Mortgage Documents were duly authorized, executed and delivered by Borrower and that the execution and delivery of such Substitute Mortgage Documents and the performance by Borrower of its obligations thereunder will not cause a breach or a default under, any agreement, document or instrument to which Borrower is a party or to which it or the Properties are bound and otherwise in form and substance satisfactory to Lender;
(n) Borrower shall deliver to Lender such Tax Funds, Insurance Funds, Capital Expenditure Funds and Deferred Maintenance Funds as Lender determines is necessary with respect to the Substitute Property and shall specify agree to perform any repairs that Lender determines are necessary with respect to the reason(sSubstitute Property prior to the substitution;
(o) Lender shall have received a lender’s title insurance policy for the proposed Substitute Property (or, in the event a Substitute Property is located in the same county or parish in which one or more other Properties (other than an Specified Property) is located, an endorsement to the existing lender’s title insurance policy with respect to such Property or Properties located in the same county or parish as such Substitute Property in form and substance satisfactory to Lender) insuring the Lien of the Mortgage encumbering such Substitute Property as a valid first lien on such Substitute Property, free and clear of all exceptions other than as approved by Lender;
(p) each Substitute Property shall be located in a metropolitan statistical area that contains at least one Property as of the Closing Date,
(q) the “as is” value of the Specified Property, together with the “as is” value of all other Specified Properties since the Closing Date, shall be no more than twenty percent (20%) of the aggregate “as is” values of all Properties as of the Closing Date, as determined by Lender;
(r) no acquisition of a Substitute Property will result in Borrower or any guarantor for the Loan incurring any indebtedness (except as permitted by this Agreement);
(s) if any Lien, litigation or governmental proceeding is existing or pending or, to the knowledge of Borrower or Manager, threatened against any Specified Property or Substitute Property which may result in liability for Borrower, Borrower shall have deposited with Lender reserves satisfactory to Lender as security for the satisfaction of such liability;
(t) simultaneously with the substitution, Lender shall release the Specified Property from the applicable Mortgage and related Lien, provided, that Borrower has executed and delivered to Lender such release and assignment documentation as Lender reasonably requests (and, in the event the Mortgage applicable to the Specified Property encumbers other Property(ies) in addition to the Specified Property, such release shall be a partial release that relates only to the Specified Property and does not affect the Liens and security interests encumbering or on the other Property(ies)) in form and substance appropriate for the jurisdiction in which such Specified Property is located which contains standard provisions protecting the rights of Lender, as determined by Lender;
(u) the Eligible Property otherwise satisfies Lender’s then current underwriting guidelines; and
(v) Borrower shall pay to Lender all reasonable out-of-pocket costs and expenses incurred by Lender in connection with the substitution (including, without limitation, costs and expenses incurred by Lender in connection with the proposed Substitution Daterelease of the Specified Property from applicable Mortgage) and, in addition, the current reasonable and customary fee being assessed by Lender and/or its Servicer to effect releases or assignments. Notwithstanding anything to the contrary contained herein or in any other Loan Document, if the Loan is included in a REMIC Trust, no substitution will be permitted unless (1) either (a) immediately after such substitution the ratio of the unpaid principal balance of the Loan to the contrary, value of the remaining Properties (as determined by Lender using any other substitution for the Leased Property shall require the prior written consent of Lessor commercially reasonable method permitted to a REMIC Trust; and which shall be within exclude the sole discretion value of Lessor.
personal property (other than fixtures) or going concern value, if any) is equal to or less than 125% or (b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder ratio of the termunpaid principal balance of the Loan to the value of the Properties (including the Substitute Property) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution will not increase as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property Specified Property, or (2) Lender receives an opinion of counsel that the REMIC Trust will qualify not fail to maintain its status as an exchange solely of property of alike-kind under Section 1031 a REMIC Trust as a result of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., for the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Specified Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Substitution of Property. 20.1 Subject to the terms and conditions set forth in this Section 2.7, a Borrower may obtain a release of the Lien of a Mortgage (and the related Loan Documents) encumbering an Individual Property (a "Substituted Property") by substituting therefor another multi-family property acquired by such Borrower (individually, a "Substitute Property" and collectively, the "Substitute Property"), provided that (a) the Substitution Condition is satisfied, and (b) no such substitution may occur after the Anticipated Repayment Date. Borrower shall have no further right to substitute Individual Properties when the allocated loan amounts of any proposed Substituted Property when added to the allocated loan amounts of all prior Substituted property exceed one-third of the outstanding principal amount of the Loan (the initial allocated loan amounts are set forth in the Contribution Agreement). In addition, any such substitution shall be subject, in each case, to the satisfaction of the following conditions precedent:
(i) Lender shall have received a copy of (A) a deed, or (B) an assignment and assumption of lessee's interest in the Ground Lease (together with the ground lessor's consent thereto), as applicable, conveying all of Borrower's right, title and interest in and to the Substituted Property to an entity other than Borrower and a letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed or assignment and assumption, as applicable, and agreeing to record such deed or assignment and assumption, as applicable, in the real estate records for the county in which the Substituted Property is located.
(ii) Lender shall have received an appraisal of the Substitute Property dated no more than one hundred and twenty (120) days prior to the substitution by an appraiser acceptable to the Rating Agencies, indicating an appraised value of the Substitute Property that is equal to or greater than the value of the Substituted Property as shown in the appraisal delivered to Lender at the time of the encumbrance of the Substituted Property by the related Mortgage at or about the Closing Date.
(iii) After giving effect to the substitution, (a) the Borrowers' Debt Service Coverage Ratio for the prior twelve (12) month period for all of the Property (including the Substitute Property but excluding the Substituted Property) is not less than the greater of the Borrowers' Debt Service Coverage Ratio for such -------- period for all of the Property (including the Substituted Property but excluding the Substitute Property) as of the Closing Date and as of the date immediately preceding the substitution; and (b) the Borrowers' Loan to Value Ratio for all of the Property (including the Substitute Property but excluding the Substituted Property) is not more than the lesser of the Loan to Value Ratio for all of the Property ---------- (including the Substituted Property but excluding the Substitute Property) as of the Closing Date and as of the date immediately preceding the substitution.
(iv) The Net Operating Income for the Substitute Property does not show a downward trend over the three (3) years immediately prior to the date of substitution or, with respect to a Substitute Property for which information regarding the Net Operating Income of such Substitute Property for the Leased Property. ------------------------------------------------three (3) years immediately prior to the date of substitution cannot be obtained by Borrower after Borrower's exercise of diligent efforts, the Net Operating Income shall not show a downward trend for such period of time immediately prior to the date of substitution as may be determined from the information regarding such Net Operating Income available.
(av) In the event Lessor accepts an offer by Lessee to substitute other property The Net Operating Income and Debt Service Coverage Ratio (for the Leased twelve (12) month period immediately preceding the substitution) for the Substitute Property under Article 13is equal to or greater than the Net Operating Income and Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the related Substituted Property.
(vi) Lender shall have received evidence in writing from the Rating Agencies to the effect that such substitution will not result in a withdrawal, Article 14 qualification or Article 19, and provided downgrade of the respective ratings in effect immediately prior to such substitution for the Securities issued in connection with the Securitization that no are then outstanding.
(vii) No Default or Event of Default shall have occurred and be continuing, Lessee continuing and Borrower shall have the right (subject to the be in compliance in all material respects with all terms and conditions set forth below in this Article 20Agreement and in each Loan Document on Borrower's part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified warranties of Borrower contained in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution this Agreement and the proposed Substitution Date. Notwithstanding anything contained herein other Loan Documents are true and correct in all material respects on and as of the date of the substitution with respect to Borrower, the contrary, Property and the Substitute Property and containing any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred representations and warranties with respect to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or CondemnationBorrower, the Current Yield immediately prior to such damageProperty, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time periodLoan as the Rating Agencies may require, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election certificate to be in accordance with form and substance satisfactory to the provisions of this LeaseRating Agencies.
(cviii) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, Borrower shall have been satisfied executed, acknowledged and delivered to Lender (A) a Mortgage, an Assignment of Leases and two UCC Financing Statements with respect to the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such substitutionMortgage, Assignment of Leases and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Mortgage, Assignment of Leases and Rents and one of the delivery of an opinion of counsel UCC-1 Financing Statements in the real estate records for Lessor confirming that (i) the substitution of county in which the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 is located and to file one of the CodeUCC-1 Financing Statement in the office of the Secretary of State of the state in which the Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable Liens upon the Substitute Property, of the requisite priority, in whichfavor of Lender (or such other trustee as may be desired under local law), generally, except for "boot" subject only to the Permitted Encumbrances and such other Liens as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor are permitted pursuant to Code Section 1245 or 1250 or any other Code provisionthe Loan Documents and (B) an Environmental Indemnity with respect to the Substitute Property. The Mortgage, (iii) Assignment of Leases, UCC-1 Financing Statements and Environmental Indemnity shall be the substitution will result same in income, if any, form and substance as the counterparts of such documents executed and delivered with respect to Lessor the related Substituted Property subject to modifications reflecting the Substitute Property as the Individual Property that is the subject of a type described in Code Section 856(c)(2) or 856(c)(3) such documents and will not result in income such modifications reflecting the laws of the types described state in Code Section 856(c)(4) or result which the Substitute Property is located as shall be recommended by the counsel admitted to practice in such state and delivering the tax imposed under Code Section 857(b)(6), and (iv) opinion as to the substitution, together with all other substitutions and sales made or requested by Lessee enforceability of such documents required pursuant to any other leases with Lessor of properties hereto or any other transfers of clause (xiv) below. The Mortgage encumbering the Leased Substitute Property or shall secure all amounts evidenced by the properties leased under other such operating leasesNote, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In provided that in the event that the equity value of jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or group similar tax and does not permit the allocation of Substitute Properties (i.e.indebtedness for the purpose of determining the amount of such tax payable, the Fair Market Value principal amount secured by such Mortgage shall be equal to one hundred fifty percent (150%) of the amount of the Loan allocated to the Substitute Property. The amount of the Loan allocated to, and the Release Amount of, the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash AdjustmentSubstitute Release Amount")) shall equal the Release Amount of the related Substituted Property.
(eix) The Rent for such Lender shall have received (A) any "tie-in" or similar endorsement to each Title Insurance Policy insuring the Lien of an existing Mortgage as of the date of the substitution available with respect to the Title Insurance Policy insuring the Lien of the Mortgage with respect to the Substitute Property in all respects shall provide Lessor with and (B) a yield at Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the time Lien of such substitution (i.e., annual return on its investment in such the Mortgage encumbering the Substitute Property) not less than , issued by the Current Yield (and title company that issued the yield reasonably expected to be received thereafter throughout Title Insurance Policies insuring the remainder Lien of the Term) from existing Mortgages and dated as of the Leased Property prior date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the Lien of the Mortgage encumbering the Substituted Property. The Title Insurance Policy issued with respect to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property shall (1) provide coverage in the amount of the Substitute Release Amount if the "tie-in" or Substitute Properties shall be similar endorsement described above is available or, if such endorsement is not available, in an amount equal to the Minimum Purchase Price one hundred fifty percent (150%) of the Leased Property Substitute Release Amount, (2) insure Lender that the relevant Mortgage creates a valid first lien on the Substitution Date Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are contained in the Title Insurance Policies insuring the Liens of the existing Mortgages, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.
(x) Lender shall have received a current title survey for each Substitute Property, certified to the title company and Lender and their successors and assigns, in the same form and having the same content as the certification of the Survey of the Substituted Property prepared by a professional land surveyor licensed in the state in which the Substitute Property is located and acceptable to the Rating Agencies in accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property. The surveyor's seal shall be affixed to each survey and each survey shall certify that the surveyed property is not located in a "one-hundred-year flood hazard area."
(xi) Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an Individual Property hereunder have been satisfied with respect to the Substitute Property and evidence of the payment of all premiums payable for the existing policy period.
(xii) Lender shall have received a Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report, which conclude that the Substitute Property does not contain any Hazardous Substance (as defined in the Mortgage) and is not subject to any risk of contamination from any off-site Hazardous Substance. If any such report discloses the presence of any Hazardous Substance or the risk of contamination from any off-site Hazardous Substance, such report shall include an estimate of the cost of any related remediation and Borrower shall deposit with Lender an amount equal to one hundred fifty percent (150%) of such estimated cost, which deposit shall constitute additional security for the Loan and shall be released to Borrower upon the delivery to Lender of (A) an update to such report indicating that there is no longer any Hazardous Substance on the Substitute Property or any danger of contamination from any off-site Hazardous Substance that has not been fully remediated and (B) paid receipts indicating that the costs of all such remediation work have been paid.
(xiii) Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Borrower of all organizational documentation related to Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender in connection with the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction) and (C) resolutions of the general partner of Borrower authorizing the substitution and any actions taken in connection with such substitution.
(xiv) Lender shall have received the following opinions of Borrower's counsel:
(A) an opinion or opinions of counsel admitted to practice under the laws of the state in which the Substitute Property is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (viii) above are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors' rights and equitable principles, and that Borrower is qualified to do business and in good standing under the laws of the jurisdiction where the Substitute Property is located or that Borrower is not required by applicable law to qualify to do business in such jurisdiction; (B) an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ or such other counsel acceptable to the Rating Agencies stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (viii) above were duly authorized, executed and delivered by Borrower and that the execution and delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will not cause a breach of, or a default under, any agreement, document or instrument to which Borrower is a party or to which it or its properties are bound; (C) an opinion of counsel acceptable to the Rating Agencies stating that subjecting the Substitute Property to the Lien of the related Mortgage and the execution and delivery of the related Loan Documents does not and will not affect or impair the ability of Lender to enforce its remedies under all of the Loan Documents or to realize the benefits of the cross-collateralization provided for thereunder; (D) an update of the Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein; (E) an opinion of counsel acceptable to the Rating Agencies stating that the substitution and the related transactions do not constitute a fraudulent conveyance under applicable bankruptcy and insolvency laws and (F) an opinion of counsel acceptable to the Rating Agencies that the substitution does not constitute a "significant modification" of the Loan under Section 1001 of the Code or otherwise cause a tax to be imposed on a "prohibited transaction" by any REMIC Trust .
(xv) Borrower shall have paid all Basic Carrying Costs relating to the Property and the Substitute Property, including without limitation, (i) increased by any Cash Adjustment paid by Lessor pursuant accrued but unpaid insurance premiums relating to Section 20.1(d) abovethe Property and the Substitute Property, or (ii) decreased currently due Taxes (including any in arrears) relating to the Property and the Substitute Property and (iii) currently due Other Charges relating to the Property and Substitute Property.
(xvi) Borrower shall have paid or reimbursed Lender for all costs and expenses incurred by any Cash Adjustment Lender (including, without limitation, reasonable attorneys fees and disbursements) in connection with the substitution and Borrower shall have paid by Lessee pursuant all recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution. Borrower shall have paid all costs and expenses of the Rating Agencies incurred in connection with the substitution.
(xvii) Lender shall have received annual operating statements and occupancy statements for the Substitute Property for the most current completed fiscal year and a current operating statement for the Substituted Property, each certified to Section 20.1(dLender as being true and correct and a certificate from Borrower certifying that there has been no adverse change in the financial condition of the Substitute Property since the date of such operating statements.
(xviii) above.[Reserved]
(xix) Lende
Appears in 1 contract
Substitution of Property. 20.1 Substitution of Property for the Leased Property. ------------------------------------------------
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided that no Event of Default shall have occurred and be continuing, Lessee shall have the right (subject to the conditions set forth below in this Article 20, and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a20.1 (a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Sources: Lease Agreement (Emeritus Corp\wa\)
Substitution of Property. 20.1 Substitution Pursuant to the Anchor Tenant ▇▇▇▇▇▇▇▇ Lease and the Anchor Tenant ▇▇▇▇▇▇ Lease, the Eckerd Corporation, as tenant thereunder, has the right to substitute its leased premises with another unproved property subject to, among other things, the consent of the Lender. In connection therewith, notwithstanding the provisions of Section 2.5 hereof but subject to the terms and conditions set forth in this Section 2.7, the Borrower which owns the Inland Western ▇▇▇▇▇▇▇▇ Property or the Inland Western ▇▇▇▇▇▇ Property (individually and collectively the "Eckerd Borrower") may obtain a release of the Lien of its Related Mortgage (and the related Loan Documents) encumbering its Property (a "SUBSTITUTED PROPERTY") by substituting therefor another retail property acquired by the applicable Eckerd Borrower (individually, a "REPLACEMENT PROPERTY" and collectively, the 25 "REPLACEMENT PROPERTY"), and leased to Eckerd Corporation provided that the Eckerd Corporation has made a written request of the applicable Eckerd Borrower to substitute such properties pursuant to the Anchor Tenant ▇▇▇▇▇▇▇▇ Lease or Anchor Tenant ▇▇▇▇▇▇ Lease, as the case may be and (a) such substitution shall be subject to the satisfaction of the following conditions precedent:
(i) Lender shall have received a copy of a deed conveying all of such Eckerd Borrower's right, title and interest in and to the Substituted Property to an entity other than such Eckerd Borrower or the sole member of such Eckerd Borrower and a letter from such Eckerd Borrower countersigned by a title Insurance company acknowledging receipt of such deed and agreeing to record such deed in the real estate records of the appropriate recording office in the county in which the Substituted Property is located.
(ii) Lender shall have received an appraisal of each of the Replacement Property and the Substituted Property, each dated no more than sixty (60) days prior to the substitution by an appraiser acceptable to the Rating Agencies, indicating an appraised value of the Replacement Property that is not less than the greater of (a) the value of the Substituted Property as set forth in the appraisal delivered to Lender at the time of the encumbrance of the Substituted Property by the Related Mortgage or (b) the value of the Substituted Property on the date of substitution.
(iii) After giving effect to the substitution, the Aggregate Debt Service Coverage Ratio for the Loan for all of the Properties (including the Replacement Property but excluding the Substituted Property) is not less than the greater of (a) the Aggregate Debt Service Coverage Ratio on the Closing Date or (b) the Aggregate Debt Service Coverage Ratio (including the Substituted Property but excluding the Replacement Property) as of the date immediately preceding the substitution.
(iv) The Net Operating Income for the Replacement Property does not show a downward trend over three (3) consecutive years prior to the date of substitution or, with respect to a Replacement Property for which information regarding the Net Operating Income of such Replacement Property for the Leased Property. ------------------------------------------------three (3) years immediately prior to the date of substitution cannot be obtained by the Eckerd Borrower after such Borrower's exercise of diligent efforts, the Net Operating Income shall not show a downward trend for such period of time immediately prior to the date of substitution as may be determined from the information regarding such Net Operating Income available.
(av) In the event Lessor accepts an offer by Lessee to substitute other property The Net Operating Income and Debt Service Coverage Ratio (for the Leased twelve (12) month period immediately preceding the substitution) for the Replacement Property under Article 13is not less than the Net Operating Income and Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the related Substituted Property, Article 14 provided, however, if the Replacement Property has less than twelve month's operating history, for purposes of this determination, Net Operating Income shall be calculated by Lender acting in its reasonable discretion using annualized actual rental income and budgeted annual operating expenses set forth on a budget approved by Lender pursuant to the terms hereof.
(vi) The Tenant of the Replacement Property shall have comparable credit quality and financial strength (as determined by Lender) the tenant of the applicable Substituted Property.
(vii) Lender shall have received confirmation in writing from the Rating Agencies to the effect that such substitution will not result in a withdrawal, qualification or Article 19, and provided downgrade of the respective ratings in effect immediately prior to such substitution for any class of Securities issued in connection with the Securitization that no are then outstanding.
(viii) No Event of Default shall have occurred and be continuing, Lessee then exist. Lender shall have received a certificate from each Borrower confirming the right foregoing, stating that the representations and warranties of Borrower contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of the substitution with respect to each Borrower, the Substituted Property and the Replacement Property, such certificate to be in form and substance satisfactory to Lender and the Rating Agencies.
(ix) The applicable Eckerd Borrower shall have executed, acknowledged and delivered to Lender (A) a Mortgage and an Assignment of Leases with respect to the Replacement Property, together with a letter from such Borrower countersigned by a title insurance company acknowledging receipt of such Mortgage, and Assignment of Leases and agreeing to record in the real estate records for the county in which the Replacement Property is located and to file any UCC Financing Statements in the public records of the jurisdictions in which Lender shall require such UCC Financing Statements to be filed, so as to effectively create upon such recording and filing valid and enforceable first priority Liens upon the Replacement Property, in favor of Lender (or such other trustee as may be required under local law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and (B) and an Environmental Indemnity, Indemnity Agreement, Guaranty regarding cross collateralization, Borrower's estoppel regarding tenants, and other loan documents or certifications with respect to the Replacement Property as Lender shall request. The Mortgage, Assignment of Leases and Rents, UCC Financing Statements, Indemnity, Guranty, and Borrower's estoppel shall be the same in form and substance as the counterparts of such documents executed and delivered with respect to the related Substituted Property subject to modifications reflecting the conditions set forth below Replacement Property as the Property that is the subject of such documents and such modifications reflecting the laws of the state in this Article 20, and upon notice which the Replacement Property is located as shall be recommended by the counsel admitted to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified practice in such notice (state and delivering the "Substitution Date") occurring not less than 90 days after receipt by Lessor opinion as to the enforceability of such noticedocuments required pursuant to clause (xiv) below. The notice Mortgage encumbering the Replacement Property shall secure all amounts evidenced by the Note and Guaranty executed by the applicable Borrower.
(x) Each other Borrower shall have executed and delivered to Lender an instrument ratifying its obligations under its respective Guaranty notwithstanding the applicable Property substitution, which instrument shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein substance satisfactory to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of LessorLender in its reasonable discretion.
(bxi) If Lessee gives Lender shall have received (A) any "tie-in" or similar endorsement to each applicable Title Insurance Policy insuring the notice referred Lien of an existing Mortgage as of the date of the substitution available with respect to in Section 20.1(athe Title Insurance Policy insuring the Lien of the Mortgage with respect to the Replacement Property and (B) above, Lessee shall present to Lessor one or more properties a Title Insurance Policy (or groups a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the Lien of propertiesthe Mortgage encumbering the Replacement Property, issued by the title company that issued the Title Insurance Policies insuring the lien of the existing Mortgages and dated as of the date of the substitution. The Title Insurance Policy issued with respect to the Replacement Property shall (1) each provide coverage in the amount of which property (the Related Note if the "tie-in" or groups of properties) shall provide Lessor with a yield (i.e.similar endorsement described above is available or, if such endorsement is not available, in an annual return on its equity in such property) amount equal to or greater than the Current Yield one hundred twenty-five percent (and the yield reasonably expected to be received thereafter throughout the remainder of the term125%) from the Leased Property at the time of such proposed substitution amount, (or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation2) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend insure Lender that the Substitute Properties fail to meet Related Mortgage creates a valid first priority lien on the Replacement Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the conditions for substitution set forth in this Article 20, including the provisions terms of Sections 20.1(cany endorsements), (d3) contain such endorsements and affirmative coverages as are contained in the Title Insurance Policies insuring the Liens of the existing Mortgages, and (e4) below; Lessee name Lender, together with its successors and assigns, as the insured. Lender also shall withdraw its offer have received copies of paid receipts or other evidence showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.
(xii) Lender shall have received a title survey for each Replacement Property, certified to substitute property whereupon Lessee shall within thirty (30) days the title company and Lender and their successors and assigns, in the materially same form and having the same content as the certification of notice the Survey of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) the Substituted Property prepared by a professional land surveyor licensed in the state in which the Replacement Property is located and acceptable to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be Rating Agencies in accordance with the provisions of this Lease1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Replacement Property. The surveyor's seal shall be affixed to each survey and each survey shall certify that the surveyed property is not located in a "one-hundred-year flood hazard area."
(cxiii) It Lender shall be a condition to consummation have received valid certificates of any substitution insurance indicating that the requirements for the policies of insurance required for each Property hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to the Replacement Property and evidence of the payment of all premiums payable for the existing policy period.
(xiv) Lender shall have received a Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report, which conclude that the Replacement Property does not contain any Hazardous Substance (as defined in the Mortgage) and is not subject to any risk of contamination from any off-site Hazardous Substance.
(xv) The applicable Eckerd Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Borrower of all organizational documentation related to Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender in connection with the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Replacement Property is located (if required in such jurisdiction) and (C) resolutions of the member of such Borrower authorizing the substitution and any actions taken in connection with such substitution.
(xvi) Lender shall have received the following opinions of the applicable Eckerd Borrower's counsel: (A) an opinion or opinions of counsel admitted to practice under the laws of the state in which the Replacement Property is located stating that the Loan Documents delivered with respect to the Replacement Property pursuant to clause (ix) above are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors' rights and equitable principles, and that such Borrower is qualified to do business and in good standing under the delivery laws of the jurisdiction where the Replacement Property is located or that such Borrower is not required by applicable law to qualify to do business in such jurisdiction; (B) an opinion of counsel stating that the Loan Documents delivered with respect to the Replacement Property pursuant to clause (ix) above were duly authorized, executed and delivered by such Borrower and that the execution and delivery of such Loan Documents and the performance by such Borrower of its obligations thereunder will not cause a breach of, or a default under, any agreement, document or instrument to which such Borrower is a party or to which it or its properties are bound; (C) an opinion of counsel or other evidence acceptable to the Rating Agencies stating that subjecting the Replacement Property to the Lien of the Related Mortgage and the execution and delivery of the related Loan Documents does not and will not affect or impair the ability of Lender to enforce its remedies under all of the Loan Documents or to realize the benefits of the cross-collateralization provided for Lessor confirming thereunder; and (D) an opinion of counsel acceptable to the Rating Agencies that the substitution does not constitute a "significant modification" of the Loan under Section 1001 of the Code or otherwise cause a tax to be imposed on a "prohibited transaction" by any REMIC Trust holding an interest in the Loan.
(xvii) The applicable Eckerd Borrower shall have paid all Basic Carrying Costs relating to the Properties and the Replacement Property, including without limitation, (i) accrued but unpaid insurance premiums relating to the substitution of Properties and the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to LessorReplacement Property, (ii) currently due and payable Taxes (including any in arrears) relating to the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, Properties and the Replacement Property and (iii) currently due Other Charges relating to the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) Properties and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860Replacement Property.
(dxviii) In The applicable Eckerd Borrower shall have paid or reimbursed Lender for all costs and expenses incurred by Lender (including, without limitation, reasonable attorneys fees and disbursements) in connection with the event that substitution and such Borrower shall have paid all recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the equity value substitution. The applicable Eckerd Borrower shall have paid all costs and expenses of the Substitute Property or group of Substitute Properties (i.e., Rating Agencies incurred in connection with the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment")substitution.
(exix) The Rent Lender shall have received annual operating statements and occupancy statements for such Substitute the Replacement Property for the most recently completed fiscal year and a current operating statement for the Substituted Property, each certified to Lender as being, to the best of the applicable Eckerd Borrower's knowledge, true and correct and a certificate from the applicable Eckerd Borrower certifying that there has been no adverse change in all respects shall provide Lessor with a yield at the time financial condition of the Replacement Property since the date of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factorsoperating statements.
(fxx) The Minimum Purchase Price applicable Eckerd Borrower shall have delivered to Lender estoppel certificates from Eckerd Corporation at the Replacement Property. All such estoppel certificates shall indicate that (1) the subject lease is a valid and binding obligation of any Substitute Property or Substitute Properties shall be an amount equal the tenant thereunder, (2) to the Minimum Purchase Price knowledge of such tenant, there are no defaults under such lease on the part of the Leased landlord or tenant thereunder, (3) the tenant thereunder has no defense or offset to the payment of rent under such leases, (4) no rent under such lease has been paid more than one (1) month in advance, (5) the tenant thereunder has no option or right of first refusal under such lease to purchase all or any portion of the Replacement Property on and (6) all tenant improvement work required under such lease has been completed and the Substitution Date tenant under such lease is in actual occupancy of its leased premises.
(ixxi) increased Lender shall have received copies of the Tenant Lease with Eckerd Corporation or an amendment to the applicable Anchor Tenant Lease and any ground leases from Eckerd Corporation affecting the Replacement Property certified by any Cash Adjustment paid the applicable Eckerd Borrower as being true and correct. Lender shall have received a current rent roll of the Replacement Property certified by Lessor pursuant to Section 20.1(dsuch Eckerd Borrower as being true and correct.
(xxii) aboveLender shall have received subordination, or nondisturbance and attornment agreements from all Tenants at the Replacement Property (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.unless such Tenant
Appears in 1 contract
Sources: Loan Agreement (Inland Western Retail Real Estate Trust Inc)
Substitution of Property. 20.1 Substitution of Property for the Leased Property. ------------------------------------------------SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY.
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided that no Event of Default shall have occurred and be continuing, Lessee shall have the right (subject to the conditions set forth below in this Article 20, and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, in which case the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee , the matter shall withdraw its offer be submitted to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be arbitration in accordance with Article 31 and the provisions time periods for Lessor's approval or rejection shall be tolled during the period of this Leasesuch arbitration.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alikea like-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution or sale will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution or sale will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitutionsubstitution or sale, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Substitution of Property. 20.1 The Borrowers may from time to time provide substitute real property collateral (the “Substituted Property”) for any real property Collateral; provided that for each such substitution (a “Property Substitution”) the following conditions are satisfied with respect to such Property Substitution of Property for and the Leased applicable Substituted Property. ------------------------------------------------:
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 no Default or Article 19, and provided that no Event of Default shall have has occurred and be continuing, Lessee shall have the right (subject is continuing both before and after giving effect to the conditions set forth below in this Article 20, and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased such Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.Substitution;
(b) If Lessee gives the notice referred Flexibility Conditions are satisfied as of the date of and both before and immediately after giving effect to such Property Substitution;
(c) the applicable Substituted Property is free and clear of all Liens other than Liens described in Section 20.1(aclauses (a), (b) aboveand (e) of the definition of Permitted Liens;
(d) Agent shall have received an appraisal (in form and substance and by an appraiser reasonably satisfactory to the Agent) for the applicable Substituted Property (the “Substituted Property Appraisal”), Lessee dated no more than six (6) months prior to the date of such Property Substitution;
(e) the appraised value of the applicable Substituted Property, as set forth in the Substituted Property Appraisal shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) be equal to or greater than the Current Yield (and value, as reasonably determined by the yield reasonably expected to be received thereafter throughout the remainder Agent, of the termportion of the Collateral being replaced (the “Replaced Property”);
(f) from the Leased Agent shall have received each of the following:
(i) a fully executed Mortgage (the “Substituted Property at Mortgage”) with respect to each parcel of the time Substituted Property, in substantially the form of such proposed substitution (the Mortgages delivered on or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to the Closing Date, with such damage, destruction or Condemnation) modifications thereto as shall be advisable and as are reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent acceptable to the Fair Market Value of Agent with respect to the Leased Property. Lessor shall have a period of 90 days within local jurisdictions in which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or located;
(ii) purchase an ALTA extended coverage title policy or policies, in form and substance and in amounts and with such endorsements as are reasonably acceptable to the Leased Agent, with respect to each Substituted Property Mortgage;
(iii) duly executed UCC-3 Termination Statements or such other instruments or evidence, in form and substance satisfactory to the Agent, as shall be necessary to terminate and satisfy all Liens, if any, on the Substituted Property; and
(iv) to the extent reasonably requested by the Agent or the Majority Lenders, environmental audits, surveys, title reports and any other document reasonably requested by the Agent, the Majority Lenders or any Lender, as applicable, with respect to the Substituted Property, in each case in form and substance satisfactory to the Agent, the Majority Lenders and such Lender, as applicable; and
(v) opinions of counsel for the Minimum Purchase Price with either such election Borrower which is the owner of the Substituted Property as the Agent shall reasonably request, in a form, scope and substance reasonably satisfactory to be in accordance with the provisions of this Lease.Agent and its counsel;
(cg) It Borrowers shall be have paid all reasonable costs related to such Property Substitution, including, but not limited to, reasonable attorney’s fees or fees related to appraisers, and consultants, filing fees and the cost of ALTA extended coverage title policies for the Substituted Property required above, in connection with any request for Property Substitution, and as a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and the Borrowers shall have provided evidence to the delivery of an opinion of counsel Agent that Borrowers have paid, or made arrangement satisfactory to the Agent for Lessor confirming that the payment of, all such costs which became due and payable prior to or concurrently with such Property Substitution; and
(ih) the substitution Borrowers shall execute such other documents and agreements as the Agent may require to encumber the Substituted Property and amend the Loan Documents to reflect the replacement of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.Replaced Property; and
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by no default or event of default has occurred and is continuing both before and after giving effect to such Property Substitution under the terms of any Cash Adjustment paid by Lessor Subordinated Debt. Upon a substitution of Substituted Property pursuant to the provisions of this Section 20.1(d) above2.8, all Liens on the Replaced Property in favor of the Agent for the benefit of itself and the Lenders shall be released and the Lenders hereby authorize the Agent to execute such documents and take such further action as reasonably requested by the Borrowers or (ii) decreased determined by the Agent, in furtherance of this Section 2.8. For the avoidance of doubt, following the substitution of any Cash Adjustment paid by Lessee pursuant to Replaced Property with any Substituted Property in accordance with this Section 20.1(d) above2.8, such Replaced Property shall no longer constitute Mortgaged Property, Term Loan Collateral or Real Estate Subfacility Assets for any purpose under this Agreement and Schedule 6.11 shall be deemed modified accordingly.
Appears in 1 contract
Substitution of Property. 20.1 Substitution Subject to the terms and conditions set forth in this Section 11.5, the Borrowers shall have the right to obtain a release of the lien of the applicable Deed of Trust (and the related Loan Documents) encumbering one or more Mortgaged Properties (for purposes of this section only, hereinafter referred to as, the "Substituted Property") by (i) substituting therefor one or more properties of like kind and quality (which shall include, among other things, the geographic diversity of the Substituted Property and markets and submarkets with, among other similarities, similar demographics, populations, absorption trends, accessibility and visibility) or (ii), with respect to any of the Ground Leased Properties, subjecting the fee interest, or an easement interest, in such Ground Leased Property to the lien of a security instrument in favor of Lender as security for the Leased Loan (individually, a "Replacement Property" and collectively, the "Replacement Properties"). ------------------------------------------------In addition, any such substitution (each a "Substitution") shall be subject, in each case, to the satisfaction of the following conditions precedent:
(aA) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided that no No Event of Default shall have occurred and be continuing, Lessee unless the release of the Substituted Property will cure such Event of Default.
(B) The Borrowers shall have given Lender at least forty-five (45) days prior written notice of its election to seek a Substitution.
(C) The aggregate value of the right (subject Replacement Properties, as established by the Borrowers to the conditions set forth below reasonable satisfaction of Lender, shall be at least equal to the Allocated Loan Amount of the Substituted Property as of the date immediately preceding the Substitution.
(D) After giving effect to the Substitution, the Debt Service Coverage Ratio is at least equal to the Debt Service Coverage Ratio as of the date immediately preceding the Substitution.
(E) The Borrowers shall deliver or cause to be delivered to Lender a copy of the instrument conveying to the applicable Borrower the transferred interests and, if such instrument creates a leasehold interest or an easement interest in this Article 20favor of the Borrowers, such instrument shall be reasonably satisfactory to Lender, contain such Lender protections as are contained in similar instruments accepted by Lender at Closing, and is accompanied by an estoppel or similar instrument reasonably satisfactory to Lender.
(F) The Borrowers shall have executed, acknowledged and delivered to Lender (i) a mortgage, a deed of trust, or a deed to secure debt, as applicable, with respect to the Replacement Property, so as to effectively create upon notice recording and filing valid and enforceable liens upon the Replacement Property, of first priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to Lessorthe Permitted Encumbrances and such other liens as are permitted pursuant to the applicable Loan Documents, (ii) an environmental indemnity with respect to substitute one or more properties the Replacement Property, (collectively referred iii) written confirmation from each Guarantor regarding such Substitution, (iv) modifications to the applicable Loan Documents as "Substitute Properties" or individually Lender deems desirable to properly reflect the Substitution, and (v) such other documents and agreements as a "Substitute Property") for reasonably requested to evidence the Leased Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such noticeSubstitution. The notice security instrument and environmental indemnity shall be in the same form and substance as the counterparts of such documents executed and delivered with respect to the Substituted Property, subject to modifications reflecting the Replacement Property as the property that is the subject of such documents and such modifications reflecting the laws of the State in which the Replacement Property is located.
(G) Lender shall have received (i) a title insurance policy (or a marked, signed and redated commitment to issue such title insurance policy) reasonably satisfactory to Lender insuring the lien of the security instrument encumbering the Replacement Property, issued by the Title Company and dated as of the date of the Substitution, and (ii) reasonably requested endorsements to the title policies delivered to Lender in connection with the Deeds of Trust to reflect the Substitution. Lender also shall have received copies of paid receipts showing that all premiums in respect of such endorsements and title insurance policies have been paid.
(H) The Borrowers shall deliver or cause to be delivered to Lender resolutions, if any are required, authorizing the Substitution and any actions taken in connection with such Substitution.
(I) Lender shall have received such opinions as may be reasonably requested with respect to the Loan Documents delivered with respect to the Replacement Property, the applicable Borrower's qualification, and authorization substantially in the form delivered at Closing, together with an update of the insolvency opinion indicating that the Substitution does not affect the opinions set forth therein, and an opinion of counsel stating that the Substitution does not constitute a "significant modification" of the Loan or "deemed exchange" of the Note under Section 1001 of the Code.
(J) The Borrowers shall have paid or reimbursed Lender for all third party out-of-pocket costs and expenses incurred by Lender (including, without limitation, reasonable attorneys fees and disbursements) in connection with the Substitution and the Borrowers shall have paid all Rating Agency fees, recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the Substitution.
(K) Lender shall have received a database search environmental report prepared by ▇▇▇▇▇▇ and Associates (or another consultant reasonably acceptable to Lender) on the Replacement Property, together with a Phase I or Phase II environment assessment report (if any database search environmental report reveals any condition that in Lender's reasonable judgment warrants such a report) which concludes that the subject property does not contain any Hazardous Materials (except for cleaning and other products used in connection with the routine maintenance or repair of the subject property) and is not in material violation of any Environmental Laws.
(L) Lender shall have received a physical conditions report with respect to the Replacement Property from a nationally recognized structural consultant approved by Lender in a form recognized and approved by Lender prior to such release and Substitution stating that the Replacement Property and its use comply in all material respects with applicable legal requirements of the Governmental Authorities and that the Replacement Property is in good condition and repair and free of damage or waste.
(M) Except with respect to any Substitution converting Ground Leased Properties to fee or easement owned properties, or in connection with a Substitution to cure a Default, if (1) the aggregate Allocated Loan Amount of all Substituted Properties during any calendar year exceeds five percent (5%) of the original Principal Amount of all of the Loans in the aggregate (with any excess limit permitted to be carried over into subsequent years), (2) the percentage of Operating Revenues from the applicable Replacement Property represented by telephony and investment grade tenants (taken together) is less than that from the Substituted Property, (3) the Substitute Property will be subject to a Ground Lease with a term (including all available extensions) of less than fifteen (15) years following the applicable Substitution, (4) the weighted average remaining term of the Leases with respect to the Replacement Properties is shorter than the weighted average remaining term of the Leases with respect to the Substituted Property, or (5) the Maintenance Capital Expenditures for the Replacement Properties are materially greater than the Maintenance Capital Expenditures for the Substituted Property, the Borrowers shall have delivered Rating Confirmation.
(N) On or prior to the date of Substitution, the Borrowers shall deliver an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder dated as of the term) from the Leased Property at the time date of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend Substitution certifying that the Substitute Properties fail to meet all the conditions for substitution requirements set forth in this Article 20Section 11.5 have been satisfied and remaking the applicable representations and warranties as of that date.
(O) Immediately following such Substitution, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it Substituted Property will either offer be owned by a Person other than (i) to substitute additional property the Borrowers or (ii) purchase the Leased Property any of their Affiliates for the Minimum Purchase Price with either such election a period of more than ninety (90) days unless agreed to by Lender, not to be unreasonably withheld, conditioned or delayed (unless such Substitution is effectuated to cure a Default, in accordance with which event the provisions of this Lease.
(c) It shall Substituted Property may be a condition to consummation of any substitution hereunder that all owned by an Affiliate of the Borrowers). Upon the satisfaction of the foregoing conditions set forth in Section 20.2 belowprecedent, shall have been satisfied with respect to such substitutionas reasonably determined by Lender, and to the delivery of an opinion of counsel for Lessor confirming that (i) Lender will release its lien from the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to LessorSubstituted Property, (ii) the substitution will not result in ordinary recapture income Replacement Property shall be deemed to Lessor pursuant to Code Section 1245 or 1250 or any other Code provisionbe a "Mortgaged Property" hereunder, (iii) all references herein to the substitution will result in income, if any, to Lessor Deeds of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of Trust shall include the types described in Code Section 856(c)(4) or result in applicable security instrument encumbering the tax imposed under Code Section 857(b)(6)Replacement Property, and (iv) the substitution, together applicable Allocated Loan Amount with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal respect to the difference, subject Substituted Property shall be deemed to be the Allocated Loan Amount with respect to the limitation set forth below. In the event that said equity value of the Substitute Replacement Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment")for all purposes hereunder.
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Substitution of Property. 20.1 Substitution The Borrowers shall have the right from time to time during the term of the Loan to substitute (“Substitution”) a replacement property (the “Substitute Property”) for any Property as collateral for the Leased Property. ------------------------------------------------Loan provided that each of the following conditions has been satisfied with respect to each proposed substitution:
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided that no Event of Default shall have occurred and be continuing, Lessee shall have the right (subject to the conditions set forth below in this Article 20, and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice Borrower shall be in an Affiliated Party of the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessorexisting Borrowers.
(b) If Lessee gives There shall exist no Event of Default or condition which with the giving of notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property passage of time or both could constitute an Event of Default at the time of such proposed substitution (any request for a Substitution or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, at the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor relevant Substitution is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Leasecompleted.
(c) It shall be a condition to consummation of any substitution hereunder that all With the exception of the conditions set forth in Section 20.2 belowPlaza 500 Property, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution no more than 50% of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, collateral (based upon dollars advanced) may be Substituted in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860one year.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is The Borrower must give Lender no less than said equity value 60 days written notice of the Leased Property, Lessee shall pay its intent to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make seek a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment")Substitution.
(e) The Rent Property to be substituted for such Substitute Property in one of the existing Properties shall (i) satisfy Lender’s then standard underwriting criteria and all respects shall provide Lessor with the requirements laid out herein including, without limitation, appraisals, seismic reports, engineering reports, environmental reports, title, survey, zoning, land-use requirements and other due diligence issues; (ii) have a yield at the time debt service coverage ratio of such substitution (i.e., annual return on its investment in such Substitute Property) not no less than 1.50X and a loan-to-value of no greater than 65%. Both the Current Yield debt service coverage and loan-to-value will be based upon Lender’s calculation, which shall be based on Lender’s standard criteria applied as outlined on Exhibit G attached hereto; and (iii) be of similar or better quality, functionality and the yield reasonably expected to be received thereafter throughout the remainder age of the Term) from Property being substituted and currently securing the Leased Property prior to any damageLoan, destruction or Condemnation, taking into account the Cash Adjustment paid or received all determined by Lessor and any other relevant factorsLender in its sole discretion.
(f) Borrower shall have executed and delivered to Lender deeds of trust or mortgages on the Substitute Property, together with an assignment of leases and rents, an environmental indemnity and such other documents as may be required relating to the Substitute Property. The Minimum Purchase Price Borrower shall also execute and deliver new deeds of any trust or amendments or modifications to the current Loan Documents for the seven Loans as may be necessary to fully encumber the Substitute Property or as collateral for the Loans and to cross-collateralize and cross-default the new deeds of trust and the Substitute Properties Property with the current Loan Documents and other current Properties.
(g) At the time it submits any written request for a Substitution hereunder, the Borrower shall pay to PPM Finance a Substitution Fee in the amount of Ten Thousand Dollars ($10,000) with respect to each of the first five requests for a Substitution that occur and a Substitution Fee of Twenty Thousand Dollars ($20,000) with respect to each request thereafter. Such fee shall be non-refundable regardless of whether the requested Substitution is consummated.
(h) Fee simple title in the Substitute Property must be vested in the Substitute Borrower. Borrower shall provide all items listed in Section 3 of the Application/Commitment for the Substitute Property. This includes an amount equal ALTA Lender’s Policy of Title Insurance as outlined in Section 3.2 of the Application, as well as endorsements to the Minimum Purchase Price of existing title policies held by Lender in connection with the Leased Property on other Properties and the Substitution Date seven Loans as Lender may deem reasonably necessary.
(i) increased In addition to the Substitution Fee, Borrower shall pay any and all reasonable out-of-pocket costs and expenses incurred by Lender in connection with any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) aboveSubstitution, including without limitation, all legal fees, title charges, accounting and appraisal fees, whether or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) abovenot the Substitution is consummated.
Appears in 1 contract
Substitution of Property. 20.1 Substitution Subject to the terms and conditions ------------------------ set forth in this Section 2.7, Borrower may obtain a release of the Lien of a Mortgage (and the related Loan Documents) encumbering an Individual Property for (a "SUBSTITUTED PROPERTY") by substituting therefor another automobile dealership property acquired by Borrower (individually, a "SUBSTITUTE PROPERTY" and collectively, the Leased Property. ------------------------------------------------"SUBSTITUTE PROPERTY"), provided that any such substitution shall be subject, in each case, to the satisfaction of the following conditions precedent:
(a) In All of the event Lessor accepts an offer by Lessee to substitute other property Individual Properties released during the term of the Loan shall represent in the aggregate not more than twenty-five percent (25%) of the aggregate Net Operating Income of all of the Properties for the Leased twelve (12) month period immediately preceding the Closing Date and for the twelve (12) month period immediately preceding the date of substitution.
(b) Such substitution shall not be allowed more than three (3) times during the term of the Loan.
(c) Borrower shall have delivered reasonable evidence establishing that an environmental condition exists at the Substituted Property such that the potential liability to Guarantor under Article 13the Recourse Guaranty and/or the Environmental Indemnity exceeds Two Hundred Fifty Thousand and No/100 Dollars ($250,000).
(d) Lender shall have received a copy of a deed conveying all of Borrower's right, Article 14 title and interest in and to the Substituted Property to an entity other than Borrower and a letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed or Article 19assignment and assumption, as applicable, and provided agreeing to record such deed or assignment and assumption, as applicable, in the real estate records for the county in which the Substituted Property is located.
(e) Lender shall have received an appraisal of the Substitute Property dated no more than sixty (60) days prior to the substitution by an appraiser acceptable to the Rating Agencies, indicating an appraised value of the Substitute Property that no is equal to or greater than the value of the Substituted Property determined by Lender at the time of the encumbrance of the Substituted Property by the related Mortgage at or about the Closing Date.
(f) After giving effect to the substitution, the Debt Service Coverage Ratio for the Loan for all of the Properties (including the Substitute Property but excluding the Substituted Property) is not less than the Debt Service Coverage Ratio for the Loan for all of the Properties (including the Substituted Property but excluding the Substitute Property) as of the Closing Date and as of the date immediately preceding the substitution.
(g) The Net Operating Income for the Substitute Property either (i) does not show a downward trend over the three (3) years immediately prior to the date of substitution or (ii) with respect to a Substitute Property for which information regarding the Net Operating Income of such Substitute Property for the three (3) years immediately prior to the date of substitution cannot be obtained by Borrower after Borrower's exercise of diligent efforts, the Net Operating Income shall not show a downward trend for such period of time immediately prior to the date of substitution as may be determined from the information regarding such Net Operating Income available or (iii) if the Substitute Property has been the subject of a new triple net Lease executed within such three (3) year period, the Net Operating Income shall not show a downward trend for the period, not less than twelve (12) months, since the execution of said Lease.
(h) The Net Operating Income and Property Specific Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the Substitute Property immediately after such substitution is greater than one hundred ten percent (110%) of the Net Operating Income and Property Specific Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the related Substituted Property immediately prior to such substitution.
(i) Lender shall have received confirmation in writing from the Rating Agencies to the effect that such substitution will not result in a withdrawal, qualification or downgrade of the respective ratings in effect immediately prior to such substitution for the Securities issued in connection with the Securitization that are then outstanding.
(j) No material Default or Event of Default shall have occurred and be continuing, Lessee continuing and Borrower shall have the right (subject to the be in compliance in all material respects with all terms and conditions set forth below in this Article 20Agreement and in each Loan Document on Borrower's part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified warranties of Borrower contained in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution this Agreement and the proposed Substitution Date. Notwithstanding anything contained herein other Loan Documents are true and correct in all material respects on and as of the date of the substitution with respect to Borrower, the contrary, Properties and the Substitute Property and containing any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred representations and warranties with respect to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or CondemnationBorrower, the Current Yield immediately prior to such damageProperties, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action the Loan as the Rating Agencies may require, such certificate to divest or otherwise dispose of be in form and substance satisfactory to the Leased Property within a shorter time periodRating Agencies.
(k) Borrower shall have executed, the time period shall be shortened appropriately acknowledged and delivered to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer Lender (i) a Mortgage, an Assignment of Leases and two UCC Financing Statements with respect to substitute additional property the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Mortgage, Assignment of Leases and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Mortgage, Assignment of Leases and Rents and one of the UCC-1 Financing Statements in the real estate records for the county in which the Substitute Property is located and to file one of the UCC-1 Financing Statement in the office of the Secretary of State of the state in which the Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable Liens upon the Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied and an Environmental Indemnity with respect to the Substitute Property. The Mortgage, Assignment of Leases, UCC-1 Financing Statements and Environmental Indemnity shall be the same in form and substance as the counterparts of such substitution, documents executed and delivered with respect to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of related Substituted Property subject to modifications reflecting the Substitute Property for as the Leased Individual Property will qualify as an exchange solely that is the subject of property of alike-kind under Section 1031 such documents and such modifications reflecting the laws of the Code, state in which, generally, except for "boot" which the Substitute Property is located as shall be recommended by the counsel admitted to practice in such state and delivering the opinion as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor enforceability of such documents required pursuant to Code Section 1245 or 1250 or any other Code provisionclause (q) below. The Mortgage encumbering the Substitute Property shall secure all amounts evidenced by the Note, (iii) the substitution will result provided that in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or group similar tax and does not permit the allocation of Substitute Properties (i.e.indebtedness for the purpose of determining the amount of such tax payable, the Fair Market Value principal amount secured by such Mortgage shall be equal to one hundred fifty percent (150%) of the amount of the Loan allocated to the Substitute Property. The amount of the Loan allocated to, and the Release Amount of, the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash AdjustmentSUBSTITUTE RELEASE AMOUNT")) shall equal the Release Amount of the related Substituted Property.
(el) The Rent for such Lender shall have received (A) any "tie-in" or similar endorsement to each Title Insurance Policy insuring the Lien of an existing Mortgage as of the date of the substitution available with respect to the Title Insurance Policy insuring the Lien of the Mortgage with respect to the Substitute Property in all respects shall provide Lessor with and (B) a yield at Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the time Lien of such substitution (i.e., annual return on its investment in such the Mortgage encumbering the Substitute Property) not less than , issued by the Current Yield (and title company that issued the yield reasonably expected to be received thereafter throughout Title Insurance Policies insuring the remainder Lien of the Term) from existing Mortgages and dated as of the Leased Property prior date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the Lien of the Mortgage encumbering the Substituted Property. The Title Insurance Policy issued with respect to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property shall (1) provide coverage in the amount of the Substitute Release Amount if the "tie-in" or Substitute Properties shall be similar endorsement described above is available or, if such endorsement is not available, in an amount equal to the Minimum Purchase Price one hundred fifty percent (150%) of the Leased Property Substitute Release Amount, (2) insure Lender that the relevant Mortgage creates a valid first lien on the Substitution Date Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (3) contain such endorsements and affirmative coverages as are contained in the Title Insurance Policies insuring the Liens of the existing Mortgages, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.
(m) Lender shall have received a current title survey for each Substitute Property, certified to the title company and Lender and their successors and assigns, in the same form and having the same content as the certification of the Survey of the Substituted Property prepared by a professional land surveyor licensed in the state in which the Substitute Property is located and acceptable to the Rating Agencies in accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property. The surveyor's seal shall be affixed to each survey and each survey shall certify that (A) no material Improvements on the surveyed property are relocated in an area designated as Flood Zone A or Flood Zone V by the Federal Emergency Management Administration or (B) material Improvements on the surveyed property are located in an area designated as Flood Zone A or Flood Zone V by the Federal Emergency Management Administration, in which case such property shall be covered by the flood insurance as provided in Section ------- 5.1. ---
(n) Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an Individual Property hereunder have been satisfied with respect to the Substitute Property and evidence of the payment of all premiums payable for the existing policy period.
(o) Lender shall have received a Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report, which conclude that the Substitute Property does not contain any Hazardous Substance (as defined in the Mortgage), other than as is permitted under the Loan Documents, is not subject to any risk of contamination from any off-site Hazardous Substance and does not require any remedial actions with respect to Hazardous Substances.
(p) Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Borrower of all organizational documentation related to Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender in connection with the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction) and (C) resolutions of Borrower authorizing the substitution and any actions taken in connection with such substitution.
(q) Lender shall have received the following opinions of Borrower's counsel:
(A) an opinion or opinions of counsel admitted to practice under the laws of the state in which the Substitute Property is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (k) above are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors' rights and equitable principles, and that Borrower is qualified to do business and in good standing under the laws of the jurisdiction where the Substitute Property is located or that Borrower is not required by applicable law to qualify to do business in such jurisdiction; (B) an opinion of Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ or such other counsel acceptable to the Rating Agencies stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (j) above were duly authorized, executed and delivered by Borrower and that the execution and delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will not cause a breach of, or a default under, any agreement, document or instrument to which Borrower is a party or to which it or its properties are bound; (C) an opinion of counsel acceptable to the Rating Agencies stating that subjecting the Substitute Property to the Lien of the related Mortgage and the execution and delivery of the related Loan Documents does not and will not affect or impair the ability of Lender to enforce its remedies under all of the Loan Documents or to realize the benefits of the cross- collateralization provided for thereunder; (D) an update of the Insolvency Opinion indicating that the substitution does not affect the opinions set forth therein; (E) an opinion of counsel acceptable to the Rating Agencies stating that the substitution and the related transactions do not constitute a fraudulent conveyance under applicable bankruptcy and insolvency laws and (F) an opinion of counsel acceptable to the Rating Agencies that the substitution does not constitute a "significant modification" of the Loan under Section 1001 of the Code or otherwise cause a tax to be imposed on a "prohibited transaction" by any REMIC Trust.
(r) Borrower shall have paid, or caused to be paid, all Basic Carrying Costs relating to the Properties and the Substitute Property, including without limitation, (i) increased by any Cash Adjustment paid by Lessor pursuant accrued but unpaid insurance premiums relating to Section 20.1(d) abovethe Properties and the Substitute Property, or (ii) decreased currently due Taxes (including any in arrears) relating to the Properties and the Substitute Property and (iii) currently due Other Charges relating to the Properties and Substitute Property.
(s) Borrower shall have paid or reimbursed Lender for all costs and expenses incurred by Lender (including, without limitation, reasonable attorneys fees and disbursements) in connection with the substitution and Borrower shall have paid all recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the substitution. Borrower shall have paid or caused to be paid all costs and expenses of the Rating Agencies incurred in connection with the substitution.
(t) Lender shall have received annual operating statements and occupancy statements for the Substitute Property for the most current completed fiscal year and a current operating statement for the Substituted Property, each certified to Lender as being true and correct and a certificate from Borrower certifying that there has been no material adverse change in the financial condition of the Substitute Property since the date of such operating statements.
(u) Borrower shall have delivered to Lender estoppel certificates from any Cash Adjustment paid by Lessee pursuant to Section 20.1(dexisting tenants (A) above.constituting anchor tenants at the Substitute Property, (B) leasing an entire building at the Subst
Appears in 1 contract
Substitution of Property. 20.1 Substitution Subject to the terms and conditions ------------------------ set forth in this Section 2.7, Borrower may obtain a release of the Lien of a Mortgage (and the related Loan Documents) encumbering an Individual Property for (a "SUBSTITUTED PROPERTY") by substituting therefor another automobile dealership property acquired by Borrower (individually, a "SUBSTITUTE PROPERTY" and collectively, the Leased Property. ------------------------------------------------"SUBSTITUTE PROPERTY"), provided that any such substitution shall be subject, in each case, to the satisfaction of the following conditions precedent:
(a) In All of the event Lessor accepts an offer by Lessee to substitute other property Individual Properties released during the term of the Loan shall represent in the aggregate not more than twenty- five percent (25%) of the aggregate Net Operating Income of all of the Properties for the Leased twelve (12) month period immediately preceding the Closing Date and for the twelve (12) month period immediately preceding the date of substitution.
(b) Such substitution shall not be allowed more than three (3) times during the term of the Loan.
(c) Borrower shall have delivered reasonable evidence establishing that an environmental condition exists at the Substituted Property such that the potential liability to Guarantor under Article 13the Recourse Guaranty and/or the Environmental Indemnity exceeds Two Hundred Fifty Thousand and No/100 Dollars ($250,000).
(d) Lender shall have received a copy of a deed conveying all of Borrower's right, Article 14 title and interest in and to the Substituted Property to an entity other than Borrower and a letter from Borrower countersigned by a title insurance company acknowledging receipt of such deed or Article 19assignment and assumption, as applicable, and provided agreeing to record such deed or assignment and assumption, as applicable, in the real estate records for the county in which the Substituted Property is located.
(e) Lender shall have received an appraisal of the Substitute Property dated no more than sixty (60) days prior to the substitution by an appraiser acceptable to the Rating Agencies, indicating an appraised value of the Substitute Property that no is equal to or greater than the value of the Substituted Property determined by Lender at the time of the encumbrance of the Substituted Property by the related Mortgage at or about the Closing Date.
(f) After giving effect to the substitution, the Debt Service Coverage Ratio for the Loan for all of the Properties (including the Substitute Property but excluding the Substituted Property) is not less than the Debt Service Coverage Ratio for the Loan for all of the Properties (including the Substituted Property but excluding the Substitute Property) as of the Closing Date and as of the date immediately preceding the substitution.
(g) The Net Operating Income for the Substitute Property either (i) does not show a downward trend over the three (3) years immediately prior to the date of substitution or (ii) with respect to a Substitute Property for which information regarding the Net Operating Income of such Substitute Property for the three (3) years immediately prior to the date of substitution cannot be obtained by Borrower after Borrower's exercise of diligent efforts, the Net Operating Income shall not show a downward trend for such period of time immediately prior to the date of substitution as may be determined from the information regarding such Net Operating Income available or (iii) if the Substitute Property has been the subject of a new triple net Lease executed within such three (3) year period, the Net Operating Income shall not show a downward trend for the period, not less than twelve (12) months, since the execution of said Lease.
(h) The Net Operating Income and Property Specific Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the Substitute Property immediately after such substitution is greater than one hundred ten percent (110%) of the Net Operating Income and Property Specific Debt Service Coverage Ratio (for the twelve (12) month period immediately preceding the substitution) for the related Substituted Property immediately prior to such substitution.
(i) Lender shall have received confirmation in writing from the Rating Agencies to the effect that such substitution will not result in a withdrawal, qualification or downgrade of the respective ratings in effect immediately prior to such substitution for the Securities issued in connection with the Securitization that are then outstanding.
(j) No material Default or Event of Default shall have occurred and be continuing, Lessee continuing and Borrower shall have the right (subject to the be in compliance in all material respects with all terms and conditions set forth below in this Article 20Agreement and in each Loan Document on Borrower's part to be observed or performed. Lender shall have received a certificate from Borrower confirming the foregoing, stating that the representations and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified warranties of Borrower contained in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution this Agreement and the proposed Substitution Date. Notwithstanding anything contained herein other Loan Documents are true and correct in all material respects on and as of the date of the substitution with respect to Borrower, the contrary, Properties and the Substitute Property and containing any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred representations and warranties with respect to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or CondemnationBorrower, the Current Yield immediately prior to such damageProperties, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action the Loan as the Rating Agencies may require, such certificate to divest or otherwise dispose of be in form and substance satisfactory to the Leased Property within a shorter time periodRating Agencies.
(k) Borrower shall have executed, the time period shall be shortened appropriately acknowledged and delivered to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer Lender (i) a Mortgage, an Assignment of Leases and two UCC Financing Statements with respect to substitute additional property the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Mortgage, Assignment of Leases and UCC-1 Financing Statements and agreeing to record or file, as applicable, such Mortgage, Assignment of Leases and Rents and one of the UCC-1 Financing Statements in the real estate records for the county in which the Substitute Property is located and to file one of the UCC-1 Financing Statement in the office of the Secretary of State of the state in which the Substitute Property is located, so as to effectively create upon such recording and filing valid and enforceable Liens upon the Substitute Property, of the requisite priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the Loan Documents and (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied and an Environmental Indemnity with respect to the Substitute Property. The Mortgage, Assignment of Leases, UCC-1 Financing Statements and Environmental Indemnity shall be the same in form and substance as the counterparts of such substitution, documents executed and delivered with respect to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of related Substituted Property subject to modifications reflecting the Substitute Property for as the Leased Individual Property will qualify as an exchange solely that is the subject of property of alike-kind under Section 1031 such documents and such modifications reflecting the laws of the Code, state in which, generally, except for "boot" which the Substitute Property is located as shall be recommended by the counsel admitted to practice in such state and delivering the opinion as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor enforceability of such documents required pursuant to Code Section 1245 or 1250 or any other Code provisionclause (q) below. The Mortgage encumbering the Substitute Property shall secure all amounts evidenced by the Note, (iii) the substitution will result provided that in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of jurisdiction in which the Substitute Property is located imposes a mortgage recording, intangibles or group similar tax and does not permit the allocation of Substitute Properties (i.e.indebtedness for the purpose of determining the amount of such tax payable, the Fair Market Value principal amount secured by such Mortgage shall be equal to one hundred fifty percent (150%) of the amount of the Loan allocated to the Substitute Property. The amount of the Loan allocated to, and the Release Amount of, the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash AdjustmentSUBSTITUTE RELEASE AMOUNT")) shall equal the Release Amount of the related Substituted Property.
(el) The Rent for such Lender shall have received (A) any "tie-in" or similar endorsement to each Title Insurance Policy insuring the Lien of an existing Mortgage as of the date of the substitution available with respect to the Title Insurance Policy insuring the Lien of the Mortgage with respect to the Substitute Property in all respects shall provide Lessor with and (B) a yield at Title Insurance Policy (or a marked, signed and redated commitment to issue such Title Insurance Policy) insuring the time Lien of such substitution (i.e., annual return on its investment in such the Mortgage encumbering the Substitute Property) not less than , issued by the Current Yield (and title company that issued the yield reasonably expected to be received thereafter throughout Title Insurance Policies insuring the remainder Lien of the Term) from existing Mortgages and dated as of the Leased Property prior date of the substitution, with reinsurance and direct access agreements that replace such agreements issued in connection with the Title Insurance Policy insuring the Lien of the Mortgage encumbering the Substituted Property. The Title Insurance Policy issued with respect to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property shall (1) provide coverage in the amount of the Substitute Release Amount if the "tie-in" or Substitute Properties shall be similar endorsement described above is available or, if such endorsement is not available, in an amount equal to the Minimum Purchase Price one hundred fifty percent (150%) of the Leased Property Substitute Release Amount, (2) insure Lender that the relevant Mortgage creates a valid first lien on the Substitution Date Substitute Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (ias modified by the terms of any endorsements), (3) increased contain such endorsements and affirmative coverages as are contained in the Title Insurance Policies insuring the Liens of the existing Mortgages, and (4) name Lender as the insured. Lender also shall have received copies of paid receipts showing that all premiums in respect of such endorsements and Title Insurance Policies have been paid.
(m) Lender shall have received a current title survey for each Substitute Property, certified to the title company and Lender and their successors and assigns, in the same form and having the same content as the certification of the Survey of the Substituted Property prepared by a professional land surveyor licensed in the state in which the Substitute Property is located and acceptable to the Rating Agencies in accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey shall reflect the same legal description contained in the Title Insurance Policy relating to such Substitute Property and shall include, among other things, a metes and bounds description of the real property comprising part of such Substitute Property. The surveyor's seal shall be affixed to each survey and each survey shall certify that (A) no material Improvements on the surveyed property are relocated in an area designated as Flood Zone A or Flood Zone V by the Federal Emergency Management Administration, in which case such property shall be covered by the flood insurance as provided in Section 5.1. -----------
(n) Lender shall have received valid certificates of insurance indicating that the requirements for the policies of insurance required for an Individual Property hereunder have been satisfied with respect to the Substitute Property and evidence of the payment of all premiums payable for the existing policy period.
(o) Lender shall have received a Phase I environmental report and, if recommended under the Phase I environmental report, a Phase II environmental report, which conclude that the Substitute Property does not contain any Cash Adjustment paid Hazardous Substance (as defined in the Mortgage), other than as is permitted under the Loan Documents, is not subject to any risk of contamination from any off-site Hazardous Substance and does not require any remedial actions with respect to Hazardous Substances.
(p) Borrower shall deliver or cause to be delivered to Lender (A) updates certified by Lessor Borrower of all organizational documentation related to Borrower and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender in connection with the Closing Date; (B) good standing certificates, certificates of qualification to do business in the jurisdiction in which the Substitute Property is located (if required in such jurisdiction) and (C) resolutions of Borrower authorizing the substitution and any actions taken in connection with such substitution.
(q) Lender shall have received the following opinions of Borrower's counsel:
(A) an opinion or opinions of counsel admitted to practice under the laws of the state in which the Substitute Property is located stating that the Loan Documents delivered with respect to the Substitute Property pursuant to Section 20.1(dclause (k) aboveabove are valid and enforceable in accordance with their terms, subject to the laws applicable to creditors' rights and equitable principles, and that Borrower is qualified to do business and in good standing under the laws of the jurisdiction where the Substitute Property is located or that Borrower is not required by applicable law to qualify to do business in such jurisdiction; (B) an opinion of Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ or such other counsel acceptable to the Rating Agencies stating that the Loan Documents delivered with respect to the Substitute Property pursuant to clause (j) above were duly authorized, executed and delivered by Borrower and that the execution and delivery of such Loan Documents and the performance by Borrower of its obligations thereunder will not cause a breach of, or (ii) decreased by a default under, any Cash Adjustment paid by Lessee pursuant agreement, document or instrument to Section 20.1(d) above.which Borrower is a party or to which it or its properties are bound;
Appears in 1 contract
Substitution of Property. 20.1 Substitution of Property for the Leased Property. ------------------------------------------------
(a) In At any time during the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided that no Event of Default shall have occurred and be continuing, Lessee shall have the right Lease Term upon three (subject 3) months' notice to the conditions set forth below Lessor, the Lessee may (1) deliver to the Lessor and the Assignee a written notice signed by a Responsible Officer stating that this Lease shall terminate on any Basic Rent Payment Date with respect to any Unit of Property specified in such notice which has reached an Uneconomic Condition; and (2) substitute for such Unit of Property on such date similar property (including, without limitation, related equipment) so long as such replacement property has a fair market value at least equal to the Acquisition Cost of the replaced Unit of Property and a Forecasted Value at least equal to forty-nine and two/tenths percent (49.2%) of such Acquisition Cost, assuming that the replaced Unit of Property was in the condition required by this Article 20, and upon notice to Lessor) to Lease (any such substitute one or more properties (collectively property being hereinafter referred to as "Substitute Properties" or individually as a SUBSTITUTION PROPERTY"Substitute Property") for the Leased Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor).
(b) If Such option set forth in paragraph (a) above shall be exercised by the delivery to the Lessor of a notice of substitution (the "NOTICE OF SUBSTITUTION") which shall (i) identify the Unit of Property that the Lessee gives desires to replace, (ii) describe by accurate legal description the notice referred Substitution Property, (iii) set forth the fair market value of such Substitution Property, (iv) include a copy of an appraisal for the Substituted Property with respect to the fair market value and Forecasted Value thereof as described in Section 20.1(a) abovethe preceding paragraph, Lessee shall present such appraisal to be performed by a Person reasonably satisfactory to the Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout Assignee, and, in the remainder case of the term) from the Leased Property at the time an NTI, a Phase I environmental report and, if appropriate in light of such proposed substitution (or environmental report, a Phase II environmental report or, in the case of a proposed substitution as CTO, a result of damagePhase II environmental report, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent certified to the Fair Market Value of Lessor and the Leased Property. Assignee and reasonably satisfactory to the Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required Assignee in all respects, prepared by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.reputable independent environmental
(c) It At least ten (10) Business Days prior to the Substitution Date, the Lessee shall be a condition deliver to consummation of any substitution hereunder that all the Lessor those documents, certificates and representations required under Section 4(a) of the conditions set forth Acquisition and Construction Agreement, substantially in Section 20.2 belowthe format required under Exhibit C of the Acquisition and Construction Agreement, shall have been satisfied together with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that following:
(i) An amendment to the Unit Leasing Record for the Unit of Property for which the substitution of is being made, releasing the Substitute replaced Property for from, and subjecting the Leased Substitution Property will qualify as an exchange solely of property of alike-kind under Section 1031 of to the Codeterms of, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, this Lease;
(ii) A certificate, signed by a Responsible Officer of the substitution will not result Lessee and dated the Substitution Date, certifying that the Lessee has no knowledge or reason to believe that the information contained in ordinary recapture income any appraisal or any environmental report furnished to the Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, this SECTION 32 is not accurate and complete in all respects on and as of the Substitution Date;
(iii) the substitution will result in incomeA certificate, if any, to Lessor of signed by a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income Responsible Officer of the types described in Code Section 856(c)(4) or result in Lessee and dated the tax imposed under Code Section 857(b)(6)Substitution Date, and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event certifying that the equity value representations and warranties contained in SECTION 2 of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) this Lease are true and correct in all respects on and as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as though made on and as of the such Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event and that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date no Event of Default or Potential Default has occurred and is continuing;
(iiv) increased An opinion or opinions of counsel reasonably satisfactory to the Lessor and the Assignee, dated the Substitution Date as to the effectiveness of the form of documents being delivered to transfer title to the Substitution Property, the due authorization, execution and delivery of documents in connection with such substitution, the recording of security interests with respect to such Substitution Property, that such Substitution Property will be subject to this Lease, and, if such Substitution Property is a Remediation Property, also subject to a Ground Lease, that the validity of this Lease will not be affected by the substitution, and as to such other matters as the Lessor and the Assignee may reasonably request; and
(v) Such other documents as may be reasonably necessary to consummate the transaction contemplated herein. The Lessor shall convey to the Lessee each Unit of Property and the Lessor's rights under any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) aboveGround Lease related thereto for which a substitution is made on an as-is, non-installment sale basis, without warranty by, or recourse to, the Lessor. The Lessee shall pay all transfer taxes, transfer gains taxes, mortgage recording tax, if any, recording and filing fees and all other similar taxes, fees, expenses and closing costs (iiincluding reasonable attorney's fees) decreased by in connection with the substitution of any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) aboveProperty.
Appears in 1 contract
Substitution of Property. 20.1 Substitution Subject to the terms and conditions set forth in this Section 11.5, the Borrowers shall have the right to obtain a release of the lien of the applicable Deed of Trust (and the related Loan Documents) encumbering one or more Mortgaged Properties (for purposes of this section only, hereinafter referred to as, the "SUBSTITUTED PROPERTY") by (i) substituting therefor one or more properties of like kind and quality (which shall include, among other things, the geographic diversity of the Substituted Property and markets and submarkets with, among other similarities, similar demographics, populations, absorption trends, accessibility and visibility) or (ii), with respect to any of the Ground Leased Properties, subjecting the fee interest, or an easement interest, in such Ground Leased Property to the lien of a security instrument in favor of Lender as security for the Leased PropertyLoan (individually, a "REPLACEMENT PROPERTY" and collectively, the "REPLACEMENT PROPERTIES"). ------------------------------------------------In addition, any such substitution (each a "SUBSTITUTION") shall be subject, in each case, to the satisfaction of the following conditions precedent:
(aA) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided that no No Event of Default shall have occurred and be continuing, Lessee unless the release of the Substituted Property will cure such Event of Default.
(B) The Borrowers shall have given Lender at least forty-five (45) days prior written notice of its election to seek a Substitution.
(C) The aggregate value of the right (subject Replacement Properties, as established by the Borrowers to the conditions set forth below reasonable satisfaction of Lender, shall be at least equal to the aggregate value of the Substituted Property as of the date immediately preceding the Substitution.
(D) After giving effect to the Substitution, the Debt Service Coverage Ratio of the Loan is at least equal to the Debt Service Coverage Ratio of the Loan as of the date immediately preceding the Substitution.
(E) Lender shall have received a copy of the instrument conveying to the applicable Borrower the transferred interests and, if such instrument creates a leasehold interest or an easement interest in this Article 20favor of the Borrowers, such instrument shall be reasonably satisfactory to Lender, contain such Lender protections as are contained in similar instruments accepted by Lender at Closing, and is accompanied by an estoppel or similar instrument reasonably satisfactory to Lender.
(F) The Borrowers shall have executed, acknowledged and delivered to Lender (i) a mortgage, a deed of trust, or a deed to secure debt, as applicable, with respect to the Replacement Property, so as to effectively create upon notice recording and filing valid and enforceable liens upon the Replacement Property, of first priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to Lessorthe Permitted Encumbrances and such other liens as are permitted pursuant to the Loan Documents, (ii) an environmental indemnity with respect to substitute one or more properties the Replacement Property, (collectively referred iii) written confirmation from each Guarantor regarding such Substitution, (iv) modifications to the Loan Documents as "Substitute Properties" or individually Lender deems desirable to properly reflect the Substitution, and (v) such other documents and agreements as a "Substitute Property") for reasonably requested to evidence the Leased Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such noticeSubstitution. The notice security instrument and environmental indemnity shall be in the same form and substance as the counterparts of such documents executed and delivered with respect to the Substituted Property, subject to modifications reflecting the Replacement Property as the property that is the subject of such documents and such modifications reflecting the laws of the State in which the Replacement Property is located.
(G) Lender shall have received (i) a title insurance policy (or a marked, signed and redated commitment to issue such title insurance policy) reasonably satisfactory to Lender insuring the lien of the security instrument encumbering the Replacement Property, issued by the Title Company and dated as of the date of the Substitution, and (ii) reasonably requested endorsements to the title policies delivered to Lender in connection with the Deeds of Trust to reflect the Substitution. Lender also shall have received copies of paid receipts showing that all premiums in respect of such endorsements and title insurance policies have been paid.
(H) The Borrowers shall deliver or cause to be delivered to Lender resolutions, if any are required, authorizing the Substitution and any actions taken in connection with such Substitution.
(I) Lender shall have received such opinions as may be reasonably requested with respect to the Loan Documents delivered with respect to the Replacement Property, the Borrower's qualification, and authorization substantially in the form delivered at Closing, together with an update of the insolvency opinion indicating that the Substitution does not affect the opinions set forth therein, and an opinion of counsel stating that the Substitution does not constitute a "significant modification" of the Loan or "deemed exchange" of the Note under Section 1001 of the Code.
(J) The Borrowers shall have paid or reimbursed Lender for all third party out-of-pocket costs and expenses incurred by Lender (including, without limitation, reasonable attorneys fees and disbursements) in connection with the Substitution and the Borrowers shall have paid all Rating Agency fees, recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the Substitution.
(K) Lender shall have received a database search environmental report prepared by ▇▇▇▇▇▇ and Associates (or another consultant reasonably acceptable to Lender) on the Replacement Property, together with a Phase I or Phase II environment assessment report (if any database search environmental report reveals any condition that in Lender's reasonable judgment warrants such a report) which concludes that the subject property does not contain any Hazardous Materials (except for cleaning and other products used in connection with the routine maintenance or repair of the subject property) and is not in material violation of any Environmental Laws.
(L) Lender shall have received a physical conditions report with respect to the Replacement Property from a nationally recognized structural consultant approved by Lender in a form recognized and approved by Lender prior to such release and Substitution stating that the Replacement Property and its use comply in all material respects with applicable legal requirements of the Governmental Authorities and that the Replacement Property is in good condition and repair and free of damage or waste.
(M) Except with respect to any Substitution converting Ground Leased Properties to fee or easement owned properties, or in connection with a Substitution to cure a Default, if (1) the aggregate Allocated Loan Amount of all Substituted Properties during any calendar year exceeds five percent (5%) of the original Principal Amount of the Loan (with any excess limit permitted to be carried over into subsequent years), (2) the percentage of Operating Revenues from the applicable Replacement Property represented by telephony and investment grade tenants (taken together) is less than that from the Substituted Property, (3) the Substitute Property will be subject to a Ground Lease with a term (including all available extensions) of less than fifteen (15) years following the applicable Substitution, (4) the weighted average remaining term of the Leases with respect to the Replacement Properties is shorter than the weighted average remaining term of the Leases with respect to the Substituted Property, or (5) the Maintenance Capital Expenditures for the Replacement Properties are materially greater than the Maintenance Capital Expenditures for the Substituted Property, the Borrowers shall have delivered Rating Confirmation.
(N) On or prior to the date of Substitution, the Borrowers shall deliver an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder dated as of the term) from the Leased Property at the time date of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend Substitution certifying that the Substitute Properties fail to meet all the conditions for substitution requirements set forth in this Article 20Section 11.5 have been satisfied and remaking the applicable representations and warranties as of that date.
(O) Immediately following such Substitution, including the provisions Substituted Property will be owned by a Person other than the Borrowers or any of Sections 20.1(ctheir Affiliates (unless such Substitution is effectuated to cure a Default, in which event the Substituted Property may be owned by an Affiliate of the Borrowers). Upon the satisfaction of the foregoing conditions precedent, (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer as reasonably determined by Lender, (i) to substitute additional property or (ii) purchase Lender will release its lien from the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to LessorSubstituted Property, (ii) the substitution will not result in ordinary recapture income Replacement Property shall be deemed to Lessor pursuant to Code Section 1245 or 1250 or any other Code provisionbe a "MORTGAGED PROPERTY" hereunder, (iii) all references herein to the substitution will result in income, if any, to Lessor Deeds of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of Trust shall include the types described in Code Section 856(c)(4) or result in applicable security instrument encumbering the tax imposed under Code Section 857(b)(6)Replacement Property, and (iv) the substitution, together applicable Allocated Loan Amount with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal respect to the difference, subject Substituted Property shall be deemed to be the Allocated Loan Amount with respect to the limitation set forth below. In the event that said equity value of the Substitute Replacement Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment")for all purposes hereunder.
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Substitution of Property. 20.1 Substitution Subject to the terms and conditions set forth in this Section 2.6, Borrower may obtain (i) a release of the Lien of a Mortgage (and the related Loan Documents) encumbering an Individual Property (the “Substituted Property”), and (ii) a release of the Borrower’s obligations under the Loan Documents with respect to such Substituted Property first arising after the date of such substitution (other than those obligations expressly stated to survive), by simultaneously substituting therefor another property which a prudent institutional lender would find to be of like or better kind and quality (including without limitation geographic location, tenant strength and lease terms) simultaneously acquired by Borrower, including the Improvements located thereon and all personal property owned by Borrower in connection therewith (collectively, the “Substitute Property”) for the Leased Substituted Property. ------------------------------------------------, provided that the following conditions precedent are satisfied:
(a) In During the event Lessor accepts twelve (12) month period immediately prior to and including the date of such substitution, Borrower has obtained the release and substitution of no more than six (6) of the Individual Properties (including the Substituted Property which is the subject of the current substitution) in accordance with this Section 2.6.
(b) The Allocated Loan Amount of the Substituted Property plus the Allocated Loan Amount(s) of all Substituted Properties previously released from the lien of the Mortgage in accordance with this Section 2.6, does not exceed One Hundred Twenty-Five Million Dollars ($125,000,000.00).
(c) The Maturity Date shall have not occurred.
(d) Lender shall have received at least thirty (30) days prior’ written notice requesting the substitution and identifying the Substitute Property and Substituted Property.
(e) Lender shall have received payment of a fee in the amount of one-tenth of one percent (0.10%) of the Allocated Loan Amount of the Substituted Property.
(f) Lender shall have received an offer appraisal of the Substitute Property and the Property, dated no more than ninety (90) days prior to the substitution date, by Lessee an MAI appraiser having at least five (5) years of experience in the appraisal of commercial properties with the same use as the Property and in the geographic area in which the Property is located, which appraiser would be acceptable to substitute other property a reasonably prudent institutional lender and is acceptable to the Rating Agencies.
(g) After giving effect to the substitution, the Debt Service Coverage Ratio for the Leased Loan (excluding the Substituted Property under Article 13and including the Substitute Property) is not less than the greater of (i) the Debt Service Coverage Ratio for the Loan as of the Closing Date and (ii) the Debt Service Coverage Ratio for the Loan as of the date immediately preceding the substitution (including the Substituted Property and excluding the Substitute Property).
(h) After giving effect to the substitution, Article 14 or Article 19the ratio of the outstanding principal amount of the Loan to the aggregate fair market value (based upon the value set forth in the appraisal referenced in clause (f) above) of the Property (excluding the Substituted Property and including the Substitute Property), is not greater than the lesser of (i) the ratio of the outstanding principal amount of the Loan as of the Closing Date to the aggregate fair market value of the Property as of the Closing Date (based upon the value set forth in the appraisal obtained as of the Closing Date), and provided that no (ii) the ratio of the outstanding principal amount of the Loan immediately prior to the subject release to the aggregate fair market value of the Property (including the Substituted Property and excluding the Substitute Property) immediately prior to the subject release (based upon the value set forth in the appraisal referenced in clause (f) above).
(i) The Net Operating Income (as adjusted and determined in accordance with Lender’s reasonable standard underwriting practice and procedures as used in connection with the underwriting of the Loan) for the Substitute Property does not show a downward trend over the three (3) years immediately prior to the date of substitution.
(j) If (i) the Loan has been the subject of a Securitization, and (ii) the Allocated Loan Amount of the Substituted Property plus the Allocated Loan Amount(s) of all Substituted Properties previously released from the lien of the Mortgage in accordance with this Section 2.6, exceeds Sixty-Two Million Five Hundred Thousand Dollars ($62,500,000.00), then Lender shall have received a Rating Agency Confirmation in connection with the substitution.
(k) No Event of Default shall have occurred and be continuing, Lessee continuing and Borrower shall have the right (subject to the be in compliance in all material respects with all terms and conditions set forth below in this Article 20Agreement and in each Loan Document on Borrower’s part to be observed or performed. Lender shall have received an Officer’s Certificate from Borrower confirming the foregoing, stating that the representations and upon notice warranties of Borrower contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of the substitution with respect to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Borrower, the Substituted Property and the Substitute Property") for , subject to any updates to the Leased Property on a monthly Payment Date specified representations set forth in Section 3.1.22 and Schedule II provided in writing to Lender at such notice (time, stating that the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contraryrelated transactions are arms length transactions and do not constitute a fraudulent conveyance under applicable bankruptcy and insolvency laws, containing any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred representations and warranties with respect to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or CondemnationBorrower, the Current Yield immediately prior to such damageSubstituted Property, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by the Loan as a court order or administrative action to divest or otherwise dispose of prudent institutional lender would reasonably require and/or the Leased Property within a shorter time periodRating Agencies may require, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend certifying that the Substitute Properties fail to meet all the conditions for substitution requirements set forth in this Article 20Section 2.6 for the substitution have been satisfied, including such Officer’s Certificate to be in form and substance which would be reasonably satisfactory to a prudent institutional lender and/or is satisfactory to the provisions Rating Agencies.
(1) Borrower shall have executed, acknowledged and delivered to Lender (i) a deed of Sections 20.1(ctrust (“Replacement Mortgage”) and an assignment of leases and rents (“Replacement Assignment of Leases”) with respect to the Substitute Property, together with a letter from Borrower countersigned by a title insurance company acknowledging receipt of such Replacement Mortgage and Replacement Assignment of Leases, and of a UCC-1 financing statement (“Replacement Financing Statement”), and agreeing to record such Replacement Mortgage, Replacement Assignment of Leases and Replacement Financing Statement in the real estate records for the county in which the Substitute Property is located so as to effectively create upon such recording valid and enforceable first priority Liens upon the Substitute Property in favor of Lender (dor such other trustee as may be desired under local law), subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the Replacement Loan Documents, (ii) an environmental indemnity agreement with respect to the Substitute Property (“Replacement Environmental Indemnity”) and (eiii) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days such other forms of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied loan documents with respect to the Substitute Property (together with the Replacement Mortgage, the Replacement Assignment of Leases the Replacement Financing Statement and the Replacement Environmental Indemnity, the “Replacement Loan Documents”) as would be reasonably required by a prudent institutional lender. The Replacement Loan Documents shall be the same in form and substance as the counterparts of such substitution, documents executed and delivered with respect to the delivery related Substituted Property, subject to modifications reflecting only the Substitute Property as the Property that is the subject of an opinion of counsel for Lessor confirming that (i) such documents and such modifications as a prudent institutional lender would reasonably determine to be necessary to conform such Replacement Loan Documents to the substitution applicable law, practice and property type of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of state where it is located. The Replacement Mortgage encumbering the Substitute Property or group of Substitute Properties (i.e., shall secure all amounts evidenced by the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment")Note.
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Substitution of Property. 20.1 Substitution of Property for the Leased Property122
25.1 SUBSTITUTION OF PROPERTY FOR THE LEASED PROPERTY. ------------------------------------------------
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided Provided that no Event of Default shall have has occurred and be continuingunder this Lease (excluding any Event of Default which has been waived, in writing, by the Lessor), nor any event which, with the giving of notice or the passage of time or both, would constitute such an Event of Default, Lessee shall have the right from time to time (subject referred to herein as the conditions set forth below in this Article 20"Substitution Right"), and exercisable upon not less than ninety (90) days' prior written notice to Lessor) to substitute one or more properties Lessor (collectively referred to as "Substitute Properties" or individually herein as a "Substitute PropertySubstitution Notice") for the Leased Property to substitute, on a monthly Payment Date date specified in such notice Substitution Notice (such date, as the same may be extended by express written agreement of lessor, shall be referred to herein as a "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary), any other substitution for the Leased Property shall require with a Comparable Facility. As used herein, the prior written consent of Lessor which term "Comparable Facility" shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution defined as a result of damage, destruction health care facility or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnationfacilities which Lessor determines (a) and as reasonably projected over the remaining Term of this Lease and shall have a has an appraised Fair Market Value substantially equivalent greater than or equal to the Fair Market Value greater of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the appraised Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Conversion Date or (or in ii) the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said appraised Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution that the applicable Substitution Notice is furnished to Lessor (i.e.based on appraisal criteria then in effect), annual return on its investment in such Substitute Property(b) not less has a Facility Debt Coverage Ratio greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price greater of (i) the Facility Debt Coverage Ratio of the Leased Property on as of the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) abovesecond anniversary of the Conversion Date, or (ii) decreased by the Facility Debt Coverage Ratio of the Leased Property at the time that the applicable Substitution Notice is furnished to Lessor, (c) provides a mix of services similar to the Leased Property and (d) is otherwise reasonably acceptable, in all respects, to Lessor (based on Lessor's usual and customary property evaluation criteria then in effect). Lessee may not exercise its Substitution Right more than once in any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) abovecalendar year.
Appears in 1 contract
Substitution of Property. 20.1 Substitution of Property for the Leased Property. ------------------------------------------------
(a) In Subject to the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13terms of this Section 2.8 and Lender’s consent, Article 14 or Article 19, and provided that no Event of Default is then continuing or would result therefrom, Borrower may at any time, other than during a Blackout Window, replace one of more Individual Properties (individually, a “Replaced Property” and collectively, the “Replaced Properties”, provided, however, in no event shall have occurred and be continuing, Lessee shall have the right (subject to Replaced Properties include any of the conditions Individual Properties set forth below in this Article 20on Schedule XIV, and upon notice Borrower shall not be permitted to Lessorreplace any of the Individual Properties set forth on Schedule XIV) to substitute with one or more properties Substitute Properties (collectively referred each, a “Property Substitution”), in which case Lender shall release the lien of the applicable Security Instrument (and related Loan Documents) with respect to the Replaced Properties, provided, in the case of each Property Substitution, the following conditions are met:
(i) the aggregate Allocated Loan Amounts of all Replaced Properties during the term of the Loan shall not exceed $107,250,000.00 in the aggregate;
(ii) Borrower shall have delivered all information reasonably required by Lender to underwrite the proposed Substitute Property and Lender shall have approved the Substitute Property in its sole discretion;
(iii) Lender shall have received current Appraisals of the applicable Substitute Property and the applicable Replaced Property, demonstrating that the as-is market value of such Substitute Property is equal to or greater than the greater of (x) the as-is market value of such Replaced Property at the time of substitution and (y) the appraised value of such Replaced Property as "of the Closing Date;
(iv) Lender shall be reasonably satisfied that the removal of the Replaced Property and the addition of the Substitute Property do not adversely impact (A) the geographic diversity of the Property as security for the Loan, (B) the diversity of the Tenant mix at the Property, or (C) the diversity of the property-use types of the Property as security for the Loan;
(v) Borrower shall deliver to Lender an Officer’s Certificate certifying that (i) as of the date of such Property Substitution, the representations and warranties contained in this Agreement are true and correct with respect to both the Borrower acquiring the applicable Substitute Property (to the extent such Person was not a “Borrower” as of the Closing Date) and the applicable Substitute Property (and any exceptions to such representations and warranties shall be specified in an exhibit to such Officer’s Certificate and shall be reasonably acceptable to Lender) and (ii) such Property Substitution does not result in a Material Adverse Effect;
(vi) the acquisition of the applicable Substitute Property shall not result in the incurrence of any Indebtedness that is not permitted under the terms of this Agreement, the existence of any liens on any collateral for the Loan that do not constitute not Permitted Encumbrances, or otherwise cause a Default or Event of Default to occur;
(vii) if the Loan is included in a REMIC Trust, the Loan-to-Value Ratio (as determined by Lender using any commercially reasonable method permitted to a REMIC Trust) shall not exceed 125% immediately after the substitution of the applicable Replaced Property;
(viii) after giving effect to such Property Substitution, the Debt Yield, recalculated to include only income and expense attributable to the remaining Properties (including the applicable Substitute Property, based on operating statements and rent rolls certified as true and correct by an officer of Borrower), shall not be less than the greater of (i) the Closing Date Debt Yield and (ii) the Debt Yield immediately prior to the Property Substitution;
(ix) Lender shall have received reasonably satisfactory environmental reports and engineering reports regarding the applicable Substitute Property showing no structural, environmental or other issues that are not reasonably acceptable to Lender; and, if corrective measures are recommended therein, Borrower shall have deposited into a reserve account with Lender an amount equal to one hundred ten percent (110%) of the amount required to fund such corrective measures;
(x) Lender shall have received an Officer’s Certificate reasonably satisfactory to Lender specifying any and all material unfunded obligations (including, without limitation, unpaid tenant allowances, leasing commissions and free rent) to be paid by Borrower to third parties in connection with the applicable Substitute Property, and, to the extent such amounts exceed the Unfunded Obligations Threshold (defined below), Borrower shall have made a deposit into the Unfunded Obligations Reserve Account in an amount equal to the amount of such obligations in excess of the Unfunded Obligations Threshold, which funds shall be available to Borrower in accordance with the provisions of Section 8.8 hereof to pay for such unfunded obligations at the Substitute Property; for purposes hereof, the “Unfunded Obligations Threshold” shall mean an amount equal to (i) $100,000.00 with respect to an individual Substitute Property and/or (ii) an amount which, when aggregated with all other then outstanding unfunded obligations at all Properties" , is equal to $300,000.00;
(xi) Lender shall have received the following, in each case in form and content reasonably satisfactory to Lender: (A) a current rent roll, (B) current results from operations, and (C) such other financial information as Lender shall reasonably request with respect to the applicable Borrower and/or the Property;
(xii) the applicable Individual Borrower shall have executed, acknowledged and delivered to Lender a Security Instrument with respect to each Substitute Property in form and substance of the Security Instruments delivered on the Closing Date with such changes as are required to comply with applicable Legal Requirements and are reasonably acceptable to Lender, and Borrower shall have authorized the filing of (and Lender shall file) applicable Uniform Commercial Code financing statements, in each case with such state-specific modifications as shall be reasonably recommended by counsel admitted to practice in such state and reasonably selected by Lender;
(xiii) Lender shall have received a Title Insurance Policy in respect of the Substitute Property, listing only Permitted Encumbrances and such other exceptions as are reasonably satisfactory to Lender;
(xiv) A Borrower or individually a Person that has been added as a "“Borrower” in connection with the Property Substitution shall own the fee interest (as opposed to the interest of a ground lessee) of each Substitute Property";
(xv) for Lender shall have received a Survey with respect to the Leased Substitute Property on a monthly Payment Date specified showing no encroachments or other issues that are reasonably objectionable to Lender;
(xvi) Lender shall have received evidence reasonably satisfactory to Lender that the Substitute Property is in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice compliance in all material respects with all applicable zoning requirements which evidence shall be in the form of a reasonably acceptable zoning endorsement to the applicable Title Insurance Policy and a zoning report from a third party consultant acceptable to Lender, and Lender shall have received a copy of all material permits for the use and operation of each Substitute Property and the certificate(s) of occupancy, if required and obtainable, for each Substitute Property;
(xvii) Guarantor shall deliver to Lender a ratification of its obligations under the Guaranty and the Environmental Indemnity, in each case confirming that the Substitute Property will thereafter be a Property for all purposes thereunder and that the Property Substitution does not affect Guarantor’s obligations under the Guaranty and the Environmental Indemnity;
(xviii) Lender shall have received from counsel reasonably satisfactory to Lender legal opinions as to the applicable Borrower, and the Loan Documents delivered in connection with the Property Substitution, that are in form and substance substantially similar to those delivered to Lender on the Closing Date, including a New Non-Consolidation Opinion;
(xix) Lender shall have received from counsel reasonably satisfactory to Lender an Officer's Certificate opinion that the Property Substitution does not cause a tax to be imposed on the Securitization Vehicle or, if the Securitization Vehicle is a REMIC, an opinion that the Property Substitution does not cause any portion of the Loan to cease to be a “qualified mortgage” within the meaning of section 860G(a)(3) of the Code, and that the Property Substitution does not constitute a “significant modification” of the Loan as such term is defined in the Treasury Regulations Section 1.860G-2(b) if the Loan is included in a REMIC Trust, or if the Loan is included in a grantor trust, as such term is defined in Treasury Regulations Section 1.1001-3;
(xx) Lender shall have received the then-current annual budget with respect to the applicable Substitute Property;
(xxi) Lender shall have received true and complete copies of all Leases in respect of the applicable Substitute Property;
(xxii) Borrower shall have requested estoppel certificates from each tenant at the Substitute Property on the form heretofore agreed by Lender or on the form set forth in each applicable tenant’s Lease and shall specify have delivered to Lender true and complete copies of each estoppel certificate received back from any Tenant, which shall at a minimum include estoppel certificates reasonably satisfactory to Lender from tenants comprising at least 70% of gross rental income from such Substitute Property;
(xxiii) Lender shall have received certificates of insurance (on A▇▇▇▇ Form 28, where available) demonstrating insurance coverage in respect of the reason(sSubstitute Property of types, in amounts, with insurers and otherwise in compliance with the terms, provisions and conditions set forth in this Agreement;
(xxiv) if the Property Substitution requires the addition of a Person as a “Borrower” hereunder, such Person shall be a Single Purpose Entity and have executed an assumption agreement in form and substance reasonably satisfactory to Lender assuming all obligations of Borrower under the Loan Documents, and Lender shall have received (A) all documents reasonably requested by Lender relating to the existence of such new Borrower and the due authorization of such new Borrower to assume the obligations of Borrower and to execute and deliver the documents described in this Section 2.8, each in form and substance reasonably satisfactory to Lender, including a certified copy of the applicable resolutions from all appropriate persons, certified copies of the organizational documents of such Person, together with all amendments thereto, and certificates of good standing or existence for such Person issued as of a recent date by its state of organization and each other state where such entity, by the nature of its business, is required to qualify or register, (B) reports of Uniform Commercial Code, credit, tax lien, bankruptcy and judgment searches, in such jurisdictions as Lender shall request, conducted by a nationally recognized search firm with respect to the Substitute Property and such Person and showing no liens, claims or encumbrances against such Person or the Substitute Property that are not reasonably approved by Lender, and (C) all other information reasonably requested by Lender for satisfaction of Lender’s “know-your-customer requirements” with respect to such Person;
(xxv) Borrower shall have obtained a Rating Agency Confirmation from the Rating Agencies with respect the Property Substitution;
(xxvi) Borrower shall have reimbursed Lender for all of its reasonable out of pocket costs and expenses relating to the Property Substitution (including any reasonable and customary fees charged by the Servicer and Rating Agencies in connection with such substitution); and
(xxvii) if such Property Substitution results in the release of the Individual Property owned by ARG 1CBHGNJ001, LLC and/or another Borrower whose tax identification number has been assigned to the Restricted Account and/or the Cash Management Account, Borrower shall have delivered to Lender evidence reasonably acceptable to Lender that each of the Restricted Account and the Cash Management Account have been assigned the tax identification number of a Borrower whose related Individual Property and/or Properties is secured by the Security Instruments after giving effect to such Property Substitution;
(xxviii) in connection with each Property Substitution, Borrower shall have paid to Lender a fee in an amount equal to $10,000.00 per Individual Property which has been released and replaced with a Substitute Property;
(xxix) Borrower shall have delivered to Lender such other documents, instruments and agreements as Lender may reasonably require relating to such Property Substitution; and
(xxx) Borrower shall give Lender at least forty-five (45) days’ prior written notice of any Property Substitution, identifying the proposed substitution Replaced Property or Replaced Properties, the proposed Substitute Property or Substitute Properties and the proposed date of the Property Substitution Date(which date may be extended provided that Borrower gives Lender reasonable prior written notice). Notwithstanding anything contained herein If such Property Substitution does not occur on such date (as same may have been extended), without duplication of amounts to be paid pursuant to clause (xxvi) above, Borrower shall pay to Lender all reasonable out-of-pocket expenses actually incurred by Lender in connection therewith (including to the contrary, any other substitution for the Leased extent such Property shall require the prior written consent of Lessor which shall be within the sole discretion of LessorSubstitution does not occur).
(b) If Lessee gives Upon the notice referred occurrence of any Property Substitution in accordance herewith, Lender shall execute instruments prepared by Borrower and reasonably satisfactory to in Section 20.1(a) aboveLender releasing and discharging each Replaced Property from the liens of, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) applicable Individual Borrower from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or Condemnationany obligations under, the Current Yield immediately prior Loan Documents subject to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent obligations stated to survive. Notwithstanding anything to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth contrary contained in this Article 20Section 2.8, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitutionany Lender approval or similar discretionary rights over any matters contained in this Section 2.8, and Lender agrees to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed use commercially reasonable efforts to equalize exchange values or discharge indebtedness, no gain or loss is recognized promptly respond to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant requests relating to any other leases with Lessor of properties hereto such approval or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860discretionary matters.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Substitution of Property. 20.1 XX.1 Substitution of Property for the Leased Property. ------------------------------------------------.
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13XIII, Article 14 XIV or Article 19XIX, and provided that no Event of Default shall have occurred and be continuing, Lessee shall have the right (subject to the conditions set forth below in this Article 20XX, and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, in which case the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20XX, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee , the matter shall withdraw its offer be submitted to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be arbitration in accordance with Article XXXI and the provisions time periods for Lessor's approval or rejection shall be tolled during the period of this Leasesuch arbitration.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alikea like-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution or sale will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution or sale will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitutionsubstitution or sale, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price Amount of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price Amount of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Sources: Lease Agreement (Integrated Living Communities Inc)
Substitution of Property. 20.1 Substitution Prior to the Anticipated Repayment Date, subject to the terms and conditions set forth in this Section 11.5, the Borrowers shall have the right to obtain a release of the lien of the applicable Deed of Trust (and the related Loan Documents) encumbering a Mortgaged Property (for purposes of this section only, hereinafter referred to as, the "SUBSTITUTED PROPERTY") by (i) substituting therefor one or more properties of like kind and quality (which shall include, among other things, the geographic diversity of the Substituted Property and markets and submarkets with, among other similarities, similar demographics, populations, absorption trends, accessibility and visibility) acquired by the applicable Borrower or (ii), with respect to any of the Ground Leased Properties, subjecting the fee interest, or an easement interest, in such Ground Leased Property to the lien of a security instrument in favor of Lender as security for the Leased PropertyLoan (individually, a "REPLACEMENT PROPERTY" and collectively, the "REPLACEMENT PROPERTIES"). ------------------------------------------------In addition, any such substitution (each a "SUBSTITUTION") shall be subject, in each case, to the satisfaction of the following conditions precedent:
(aA) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided that no No Event of Default shall have occurred and be continuing, Lessee unless the release of the Substituted Property will cure such Event of Default.
(B) The Borrowers shall have given Lender at least forty-five (45) days prior written notice of its election to seek a Substitution.
(C) The value of the right (subject Replacement Property, as established by the Borrowers to the conditions set forth below reasonable satisfaction of Lender, shall be at least equal to the value of the Substituted Property as of the date immediately preceding the Substitution.
(D) After giving effect to the Substitution, the Debt Service Coverage Ratio of the Loan is at least equal to the Debt Service Coverage Ratio of the Loan as of the date immediately preceding the Substitution.
(E) Lender shall have received a copy of the instrument conveying to the applicable Borrower the transferred interests and, if such instrument creates a leasehold interest or an easement interest in this Article 20favor of the Borrowers, such instrument shall be reasonably satisfactory to Lender, contain such Lender protections as are contained in similar instruments accepted by Lender at Closing, and is accompanied by an estoppel or similar instrument reasonably satisfactory to Lender.
(F) The Borrowers shall have executed, acknowledged and delivered to Lender (i) a mortgage, a deed of trust, or a deed to secure debt, as applicable, with respect to the Replacement Property, so as to effectively create upon notice recording and filing valid and enforceable liens upon the Replacement Property, of first priority, in favor of Lender (or such other trustee as may be desired under local law), subject only to Lessorthe Permitted Encumbrances and such other liens as are permitted pursuant to the Loan Documents, (ii) an environmental indemnity with respect to substitute one or more properties the Replacement Property, (collectively referred iii) written confirmation from each Guarantor regarding such Substitution, (iv) modifications to the Loan Documents as "Substitute Properties" or individually Lender deems desirable to properly reflect the Substitution, and (vi) such other documents and agreements as a "Substitute Property") for reasonably requested to evidence the Leased Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such noticeSubstitution. The notice security instrument and environmental indemnity shall be in the same form and substance as the counterparts of such documents executed and delivered with respect to the Substituted Property, subject to modifications reflecting the Replacement Property as the property that is the subject of such documents and such modifications reflecting the laws of the State in which the Replacement Property is located.
(G) Lender shall have received (i) a title insurance policy (or a marked, signed and redated commitment to issue such title insurance policy) reasonably satisfactory to Lender insuring the lien of the security instrument encumbering the Replacement Property, issued by the Title Company and dated as of the date of the Substitution, and (ii) reasonably requested endorsements to the title policies delivered to Lender in connection with the Deeds of Trust to reflect the Substitution. Lender also shall have received copies of paid receipts showing that all premiums in respect of such endorsements and title insurance policies have been paid.
(H) The Borrowers shall deliver or cause to be delivered to Lender (i) updates certified by the Borrowers of all organizational documentation related to the Borrowers and/or the formation, structure, existence, good standing and/or qualification to do business delivered to Lender in connection with the Closing; (ii) good standing certificates, certificates of qualification to do business in the State in which the Replacement Property is located (if required in such State) and (iii) resolutions, if any are required, authorizing the Substitution and any actions taken in connection with such Substitution.
(I) Lender shall have received such opinions as may be reasonably requested with respect to the Loan Documents delivered with respect to the Replacement Property, the Borrower's qualification, and authorization substantially in the form delivered at Closing, together with an update of the insolvency opinion indicating that the Substitution does not affect the opinions set forth therein, and an opinion of counsel stating that the Substitution does not constitute a "significant modification" of the Loan or "deemed exchange" of the Note under Section 1001 of the Code.
(J) Lender shall have received a Rating Confirmation.
(K) The Borrowers shall have paid or reimbursed Lender for all third party out-ofpocket costs and expenses incurred by Lender (including, without limitation, reasonable attorneys fees and disbursements) in connection with the Substitution and the Borrowers shall have paid all Rating Agency fees, recording charges, filing fees, taxes or other expenses (including, without limitation, mortgage and intangibles taxes and documentary stamp taxes) payable in connection with the Substitution.
(L) Lender shall have received a phase 1 environmental report and, if recommended under the phase 1 environmental report, a phase 2 environmental report from a nationally recognized environmental consultant approved by Lender not less than forty-five (45) days prior to such release and substitution, which conclude that the Replacement Property does not contain any Hazardous Materials (except for cleaning and other products used in connection with the routine maintenance or repair of the Replacement Property or the operation thereof as a tower property in full compliance with Environmental Laws), is not subject to any risk of contamination from any off-site Hazardous Materials, and is not in violation of any Environmental Laws.
(M) Lender shall have received a physical conditions report with respect to the Replacement Property from a nationally recognized structural consultant approved by Lender in a form recognized and approved by Lender not less than forty-five (45) days prior to such release and Substitution stating that the Replacement Property and its use comply in all material respects with applicable legal requirements of the Governmental Authorities and that the Replacement Property is in good condition and repair and free of damage or waste.
(N) Except with respect to any Substitution converting Ground Leased Properties to fee or easement owned properties, or in connection with a Substitution to cure a Default, Substitution shall only be permitted if the aggregate Allocated Loan Amount of all Substituted Properties during any calendar year does not exceed five (5%) of the original Principal Amount of the Loan, with any excess limit permitted to be carried over into subsequent years.
(O) On or prior to the date of Substitution, the Borrowers shall deliver an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder dated as of the term) from the Leased Property at the time date of such proposed substitution (or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnation) and as reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent to the Fair Market Value of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend Substitution certifying that the Substitute Properties fail to meet all the conditions for substitution requirements set forth in this Article 20Section 11.5 have been satisfied and remaking the applicable representations and warranties as of that date.
(P) Immediately following such Substitution, including the provisions Substituted Property will be owned by a Person other than the Borrowers or any of Sections 20.1(ctheir Affiliates (unless such Substitution is effectuated to cure a Default, in which event the Substituted Property may be owned by an Affiliate of the Borrowers). Upon the satisfaction of the foregoing conditions precedent, (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer as reasonably determined by Lender, (i) to substitute additional property or (ii) purchase Lender will release its lien from the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to LessorSubstituted Property, (ii) the substitution will not result in ordinary recapture income Replacement Property shall be deemed to Lessor pursuant to Code Section 1245 or 1250 or any other Code provisionbe a "MORTGAGED PROPERTY" hereunder, (iii) all references herein to the substitution will result in income, if any, to Lessor Deeds of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of Trust shall include the types described in Code Section 856(c)(4) or result in applicable security instrument encumbering the tax imposed under Code Section 857(b)(6)Replacement Property, and (iv) the substitution, together applicable Allocated Loan Amount with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal respect to the difference, subject Substituted Property shall be deemed to be the Allocated Loan Amount with respect to the limitation set forth below. In the event that said equity value of the Substitute Replacement Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment")for all purposes hereunder.
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) above.
Appears in 1 contract
Substitution of Property. 20.1 Borrowers may from time to time provide substitute real property collateral (the “Substituted Property”) for any real property Collateral; provided that for each such substitution (a “Property Substitution”) the following conditions are satisfied with respect to such Property Substitution of Property for and the Leased applicable Substituted Property. ------------------------------------------------:
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 no Default or Article 19, and provided that no Event of Default shall have has occurred and be continuing, Lessee shall have the right (subject is continuing both before and after giving effect to the conditions set forth below in this Article 20, and upon notice to Lessor) to substitute one or more properties (collectively referred to as "Substitute Properties" or individually as a "Substitute Property") for the Leased such Property on a monthly Payment Date specified in such notice (the "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary, any other substitution for the Leased Property shall require the prior written consent of Lessor which shall be within the sole discretion of Lessor.Substitution;
(b) If Lessee gives the notice referred Flexibility Conditions are satisfied as of the date of and both before and immediately after giving effect to such Property Substitution;
(c) the applicable Substituted Property is free and clear of all Liens other than Liens described in Section 20.1(aclauses (a), (b) aboveand (e) of the definition of Permitted Liens;
(d) Agent shall have received an appraisal (in form and substance and by an appraiser reasonably satisfactory to Agent) for the applicable Substituted Property (the “Substituted Property Appraisal”), Lessee shall present dated no more than six (6) months prior to Lessor one or more properties the date of such Property Substitution;
(or groups e) the appraised value of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e.the applicable Substituted Property, an annual return on its equity as set forth in such property) the Substituted Property Appraisal be equal to or greater than the Current Yield (and the yield value, as reasonably expected to be received thereafter throughout the remainder determined by Agent, of the termportion of the Collateral being replaced (the “Replaced Property”);
(f) from Agent shall have received each of the Leased following:
(i) a fully executed Mortgage (the “Substituted Property at Mortgage”) with respect to each parcel of the time Substituted Property, in substantially the form of such proposed substitution (the Mortgages delivered on or in the case of a proposed substitution as a result of damage, destruction or Condemnation, the Current Yield immediately prior to the Closing Date, with such damage, destruction or Condemnation) modifications thereto as shall be advisable and as are reasonably projected over the remaining Term of this Lease and shall have a Fair Market Value substantially equivalent acceptable to the Fair Market Value of Agent with respect to the Leased Property. Lessor shall have a period of 90 days within local jurisdictions in which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or located;
(ii) purchase an ALTA extended coverage title policy or policies, in form and substance and in amounts and with such endorsements as are reasonably acceptable to the Leased Agent, with respect to each Substituted Property Mortgage;
(iii) duly executed UCC-3 Termination Statements or such other instruments or evidence, in form and substance satisfactory to the Agent, as shall be necessary to terminate and satisfy all Liens, if any, on the Substituted Property; and
(iv) to the extent reasonably requested by the Agent or the Majority Lenders, environmental audits, surveys, title reports and any other document reasonably requested by the Agent, the Majority Lenders or any Lender, as applicable, with respect to the Substituted Property, in each case in form and substance satisfactory to the Agent, the Majority Lenders and such Lender, as applicable; and
(v) opinions of counsel for the Minimum Purchase Price with either such election Borrower which is the owner of the Substituted Property as the Agent shall reasonably request, in a form, scope and substance reasonably satisfactory to be in accordance with the provisions of this Lease.Agent and its counsel;
(cg) It Borrowers shall be have paid all reasonable costs related to such Property Substitution, including, but not limited to, reasonable attorney’s fees or fees related to appraisers, and consultants, filing fees and the cost of ALTA extended coverage title policies for the Substituted Property required above, in connection with any request for Property Substitution, and as a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, Borrowers shall have provided evidence to Agent that Borrowers have paid, or made arrangement satisfactory to Agent for the payment of, all such costs which became due and payable prior to or concurrently with such Property Substitution; and
(h) Borrowers shall execute such other documents and agreements as Agent may require to encumber the delivery of an opinion of counsel for Lessor confirming that (i) Substituted Property and amend the substitution Loan Documents to reflect the replacement of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.Replaced Property; and
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the Fair Market Value of the Leased Property minus the encumbrances subject to which Lessee will take the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution (i.e., annual return on its investment in such Substitute Property) not less than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price of the Leased Property on the Substitution Date (i) increased by no default or event of default has occurred and is continuing both before and after giving effect to such Property Substitution under the terms of any Cash Adjustment paid by Lessor Subordinated Debt. Upon a substitution of Substituted Property pursuant to the provisions of this Section 20.1(d) above2.8, all Liens on the Replaced Property in favor of the Agent for the benefit of itself and the Lenders shall be released and the Lenders hereby authorize the Agent to execute such documents and take such further action as reasonably requested by the Borrowers or (ii) decreased determined by the Agent, in furtherance of this Section 2.8. For the avoidance of doubt, following the substitution of any Cash Adjustment paid by Lessee pursuant to Replaced Property with any Substituted Property in accordance with this Section 20.1(d) above2.8, such Replaced Property shall no longer constitute Mortgaged Property, Term Loan Collateral or Real Estate Subfacility Assets for any purpose under this Agreement and Schedule 6.11 shall be deemed modified accordingly.
Appears in 1 contract
Substitution of Property. 20.1 Substitution 1Substitution of Property for the Leased Property. ------------------------------------------------
(a) In the event Lessor accepts an offer by Lessee to substitute other property for the Leased Property under Article 13, Article 14 or Article 19, and provided Provided that no Event of Default shall have has occurred and be continuingunder this Lease (excluding any Event of Default which has been waived, in writing, by the Lessor), nor any event which, with the giving of notice or the passage of time or both, would constitute such an Event of Default, Lessee shall have the right from time to time (subject referred to herein as the conditions set forth below in this Article 20"Substitution Right"), and exercisable upon not less than ninety (90) days' prior written notice to Lessor) to substitute one or more properties Lessor (collectively referred to as "Substitute Properties" or individually herein as a "Substitute PropertySubstitution Notice") for the Leased Property to substitute, on a monthly Payment Date date specified in such notice Substitution Notice (such date, as the same may be extended by express written agreement of lessor, shall be referred to herein as a "Substitution Date") occurring not less than 90 days after receipt by Lessor of such notice. The notice shall be in the form of an Officer's Certificate and shall specify the reason(s) for the proposed substitution and the proposed Substitution Date. Notwithstanding anything contained herein to the contrary), any other substitution for the Leased Property shall require with a Comparable Facility. As used herein, the prior written consent of Lessor which term "Comparable Facility" shall be within the sole discretion of Lessor.
(b) If Lessee gives the notice referred to in Section 20.1(a) above, Lessee shall present to Lessor one or more properties (or groups of properties) each of which property (or groups of properties) shall provide Lessor with a yield (i.e., an annual return on its equity in such property) equal to or greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the term) from the Leased Property at the time of such proposed substitution (or in the case of a proposed substitution defined as a result of damage, destruction health care facility or Condemnation, the Current Yield immediately prior to such damage, destruction or Condemnationfacilities which Lessor determines (a) and as reasonably projected over the remaining Term of this Lease and shall have a has an appraised Fair Market Value substantially equivalent greater than or equal to the Fair Market Value greater of the Leased Property. Lessor shall have a period of 90 days within which to review such information and either to accept or to reject the Substitute Property or Substitute Properties so presented; provided that if Lessee is required by a court order or administrative action to divest or otherwise dispose of the Leased Property within a shorter time period, the time period shall be shortened appropriately to meet the reasonable needs of Lessee, but in no event shall said period be less than 15 Business Days after Lessor's receipt of said notice (subject to further extension for any period of time in which Lessor is not timely provided with the information provided for in Section 20.2 and Section 20.3 below); provided that if Lessor shall contend that the Substitute Properties fail to meet all the conditions for substitution set forth in this Article 20, including the provisions of Sections 20.1(c), (d) and (e) below; Lessee shall withdraw its offer to substitute property whereupon Lessee shall within thirty (30) days of notice of its withdrawn offer of substitution give Lessor written notice that it will either offer (i) to substitute additional property or (ii) purchase the Leased Property for the Minimum Purchase Price with either such election to be in accordance with the provisions of this Lease.
(c) It shall be a condition to consummation of any substitution hereunder that all of the conditions set forth in Section 20.2 below, shall have been satisfied with respect to such substitution, and to the delivery of an opinion of counsel for Lessor confirming that (i) the substitution of the Substitute Property for the Leased Property will qualify as an exchange solely of property of alike-kind under Section 1031 of the Code, in which, generally, except for "boot" such as cash needed to equalize exchange values or discharge indebtedness, no gain or loss is recognized to Lessor, (ii) the substitution will not result in ordinary recapture income to Lessor pursuant to Code Section 1245 or 1250 or any other Code provision, (iii) the substitution will result in income, if any, to Lessor of a type described in Code Section 856(c)(2) or 856(c)(3) and will not result in income of the types described in Code Section 856(c)(4) or result in the tax imposed under Code Section 857(b)(6), and (iv) the substitution, together with all other substitutions and sales made or requested by Lessee pursuant to any other leases with Lessor of properties hereto or any other transfers of the Leased Property or the properties leased under other such operating leases, during the relevant time period, will not jeopardize the qualification of Lessor as a real estate investment trust under Code Sections 856-860.
(d) In the event that the equity value of the Substitute Property or group of Substitute Properties (i.e., the Fair Market Value of the Substitute Property or group of Substitute Properties minus the encumbrances subject to which Lessor will take the Substitute Property or group of Substitute Properties) as of the Substitution Date is greater than the equity value of the Leased Property (i.e., the appraised Fair Market Value of the Leased Property minus at the encumbrances subject to which Lessee will take Commencement Date or (ii) the Leased Property) as of the Substitution Date (or in the case of damage destruction or Condemnation, the Fair Market Value immediately prior to such damage, destruction or Condemnation), Lessor shall pay to Lessee an amount equal to the difference, subject to the limitation set forth below. In the event that said equity value of the Substitute Property or group of Substitute Properties is less than said equity value of the Leased Property, Lessee shall pay to Lessor an amount equal to the difference, subject to the limitation set forth below. Notwithstanding the foregoing, neither Lessor nor Lessee shall be obligated to consummate any substitution if such party would be required to make a payment to the other in excess of an amount equal to ten percent of said appraised Fair Market Value of the Leased Property (the amount of cash paid by one party to the other being hereinafter referred to as the "Cash Adjustment").
(e) The Rent for such Substitute Property in all respects shall provide Lessor with a yield at the time of such substitution that the applicable Substitution Notice is furnished to Lessor (i.e.based on appraisal criteria then in effect), annual return on its investment in such Substitute Property(b) not less has a Facility Debt Coverage Ratio greater than the Current Yield (and the yield reasonably expected to be received thereafter throughout the remainder of the Term) from the Leased Property prior to any damage, destruction or Condemnation, taking into account the Cash Adjustment paid or received by Lessor and any other relevant factors.
(f) The Minimum Purchase Price of any Substitute Property or Substitute Properties shall be an amount equal to the Minimum Purchase Price greater of (i) the Facility Debt Coverage Ratio of the Leased Property on as of the Substitution second anniversary of the Commencement Date (i) increased by any Cash Adjustment paid by Lessor pursuant to Section 20.1(d) above, or (ii) decreased by the Facility Debt Coverage Ratio of the Leased Property at the time that the applicable Substitution Notice is furnished to Lessor, (c) provides a mix of services similar to the Leased Property and (d) is otherwise reasonably acceptable, in all respects, to Lessor (based on Lessor's usual and customary property evaluation criteria then in effect). Lessee may not exercise its Substitution Right more than once in any Cash Adjustment paid by Lessee pursuant to Section 20.1(d) abovecalendar year.
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