Common use of Entity Specific Debt Clause in Contracts

Entity Specific Debt. In this example, all of the facts described in the Base Case above are the same, except that we assume that (i) Company B is 100% owned by an upper-tier entity, “Holdings,” that will be acquired by the Operating Partnership in the Formation Transactions, (ii) Holdings is subject to $50 of Entity Specific Debt that will be assumed by the Operating Partnership at the Closing (for simplicity’s sake, we assume no assumption fee) and (iii) the $50 of Entity Specific Debt is allocated to RIF II Industrial Center. This results in the following variation of the variable “AA” in the formula as applied to RIF II Industrial Center: RIF I Industrial Center 0 = 00 - 00 XXX XX Xxxxxxxxxx Xxxxxx -00 = 25 - 75 RIF V Industrial Center 0 = 25 - 25 Total Portfolio Adjustment (“TPA”) -50 As noted above, M&S’s Fairness Opinion takes into account only asset-level debt in determining the relative unadjusted equity percentages of the Target Assets. Entity Specific Debt is allocated to relevant properties in the relevant Funds directly through the Equity Value formula. As demonstrated below, the effect is to increase the relative value of properties that are not burdened by Entity Specific Debt, and correlatively decrease the value of properties that are subject to Entity Specific Debt. The Equity Value formula accomplishes this by reflecting that TFTV decreases as a result of Entity Specific Debt. In the specific example above, because the aggregate outstanding debt that will be assumed by the Operating Partnership at the Closing now includes Holdings’ $50 of Entity Specific Debt, Total Formation Transaction Value would decrease by the same amount, from $500 to $450, relative to the Base Case. The Equity Value formula allocates the $50 decrease in TFTV solely to RIF II Industrial Center, and does not impact the Equity Value of the other Target Assets, as set forth below: RIF I Industrial Center 100 = 20% x [450 - (-50)] + 0 RIF II Industrial Center 50 = 20% x [450 - (-50)] + (-50) RIF III Industrial Center 100 = 20% x [450 - (-50)] + 0 RIF IV Industrial Center 100 = 20% x [450 - (-50)] + 0 RIF V Industrial Center 100 = 20% x [450 - (-50)] + 0 Total Equity Value 450

Entity Specific Debt. In this example, all of the facts described in the Base Case above are the same, except that we assume that (i) Company B is 100% owned by an upper-tier entity, “Holdings,” that will be acquired by the Operating Partnership in the Formation Transactions, (ii) Holdings is subject to $50 of Entity Specific Debt that will be assumed by the Operating Partnership at the Closing (for simplicity’s sake, we assume no assumption fee) and (iii) the $50 of Entity Specific Debt is allocated to RIF II Industrial Center. This results in the following variation of the variable “AA” in the formula as applied to RIF II Industrial Center: RIF I Industrial Center 0 = 00 - 00 XXX XX Xxxxxxxxxx Xxxxxx -00 = 25 - 75 -75 RIF V Industrial Center 0 = 25 - 25 Total Portfolio Adjustment (“TPA”) -50 As noted above, M&S’s Fairness Opinion takes into account only asset-level debt in determining the relative unadjusted equity percentages of the Target Assets. Entity Specific Debt is allocated to relevant properties in the relevant Funds directly through the Equity Value formula. As demonstrated below, the effect is to increase the relative value of properties that are not burdened by Entity Specific Debt, and correlatively decrease the value of properties that are subject to Entity Specific Debt. The Equity Value formula accomplishes this by reflecting that TFTV decreases as a result of Entity Specific Debt. In the specific example above, because the aggregate outstanding debt that will be assumed by the Operating Partnership at the Closing now includes Holdings’ $50 of Entity Specific Debt, Total Formation Transaction Value would decrease by the same amount, from $500 to $450, relative to the Base Case. The Equity Value formula allocates the $50 decrease in TFTV solely to RIF II Industrial Center, and does not impact the Equity Value of the other Target Assets, as set forth below: RIF I Industrial Center 100 = 20% x [450 - (-50)] + 0 RIF II Industrial Center 50 = 20% x [450 - (-50)] + (-50) RIF III Industrial Center 100 = 20% x [450 - (-50)] + 0 RIF IV Industrial Center 100 = 20% x [450 - (-50)] + 0 RIF V Industrial Center 100 = 20% x [450 - (-50)] + 0 Total Equity Value 450