ASSET MANAGEMENT AGREEMENT
This
ASSET MANAGEMENT AGREEMENT (this “Agreement”) is dated
as of this 29th day of February, 2008, between RRE PARK HILL HOLDINGS, LLC, a
Delaware limited liability company (the “Owner”), and RESOURCE
REAL ESTATE MANAGEMENT, LLC, a Delaware limited liability company (the “Manager”), with
reference to the following facts:
RECITALS
A.
Owner is the owner of a 288-unit multifamily project
(the “Property”) commonly
known as Park Hill Apartments located at 0000 Xxxxxxxxxxxxxx Xxxx, Xxx Xxxxxxx,
Xxxxx.
B.
The Property is subject to a non-recourse loan (the “Loan”) secured by a
deed of trust (the “Mortgage”) in favor
of Grandbridge Real Estate Capital LLC and/or Xxxxxx Xxx (together with its
successors and assigns, the “Lender”; and the Mortgage and other documents,
agreements and instruments evidencing, securing or delivered to the Lender in
connection with the Loan are collectively referred to herein as the “Loan
Documents”).
C.
The Owner desires to engage the Manager to (i) oversee and supervise the
Property, and (ii) oversee the day-to-day management of the
Property. The Manager may engage a local property manager, which may
be an affiliate of the Manager or a third party, which may further subcontract
some or all of these responsibilities, to directly manage, lease, operate and
maintain the Property on a day-to-day basis.
1.
Exclusive
Agency. Owner hereby designates Manager to serve as the
"Property Manager" of the Property. Manager shall have the exclusive
right and duty to rent, lease, operate and manage Property. Upon the
terms hereinafter set forth for the period of one year beginning on the date
hereof, and thereafter for annual periods unless on or before the sixtieth
(60th) day
prior to the then expiration date of the term hereof, either party hereto shall
notify the other in writing of its intention to terminate this Agreement in
which case this Agreement shall terminate as of the end of the then current
term.
Upon
termination of this Agreement, Manager shall turn over to Owner all books and
records and all leases and contracts pertaining to the Property.
Notwithstanding
anything to the contrary herein, Manager may subcontract with a local property
manager to act as property manager for the Property.
2.
Manager’s
Obligations. Manager and Owner acknowledge that Manager may
from time to time hereafter act as Manager for competing commercial projects and
is to use its best efforts to locate tenants and manage the Property on a basis
which is competitive with other projects it may hereafter manage in the San
Antonio, Texas area. Manager accepts the obligations and provisions
of this Agreement and agrees:
(a)
Due
Diligence. To use due diligence in the management of the
Property and performance of all duties and obligations of Manager in a
first-rate manner for the period and upon the terms herein provided, and agrees
to furnish or cause to be furnished the services of its organization for the
complete management of the Property, including but not limited to the renting,
operating, and care of the Property and negotiation of leases related
thereto.
(b)
Vacancies. To
advise Owner periodically as to vacant space and in reasonable detail as to the
physical condition of the Property, and of its competitive position with other
apartment complexes in the San Antonio, Texas region.
(c)
Separate
Fund. To deposit all receipts collected from the Property in a
trust account in a bank approved by Owner and insured by the Federal Deposit
Insurance Corporation, separate from Manager's personal account and to pay
expenses pursuant to an operating budget approved by Owner and to pay the
balance of such receipts pursuant to the instruments, documents and agreements
evidencing the Loan. However, Manager will not be held liable
in the event of bankruptcy or failure of a depository.
(d)
Negotiations
with Utility Companies. To negotiate with utility companies
for competitive treatment with other projects in the respective area, if
applicable.
(e)
Operating Budget and
Marketing. To prepare on an annual basis for Owner, if
appropriate, annual operating budgets for the Property and a marketing
plan.
(f)
Approval of
Owner. Anything herein to the contrary notwithstanding, the
following decisions and actions of Manager shall be subject to the prior
approval of Owner: determination of the amount and type of insurance
coverage and the company issuing the same; independent certified accountants;
settlements with insurance companies or condemning authorities involving amounts
in excess of $5,000 and the granting of any easements.
(g)
Inspection. To
make periodic inspections of all space at the Property, in order to observe the
maintenance and condition thereof. Owner shall reimburse Manager for
all travel expenses incurred in connection with such inspections or any other
business related to the management of the Property.
(h)
Personal Property
Inventory. To maintain an inventory of all personal property
located on the Property.
3.
Owner hereby gives Manager the following authority and
powers. Owner agrees to assume the expenses in connection therewith
and Manager agrees to assume and undertake the following
responsibilities:
(a)
Rent
Collection. To collect rents due or to become due; to serve in
the name of the Owner such notices as are deemed necessary by Manager to
institute and prosecute actions, to evict tenants and to recover possession of
said premises; from time to time to make rules and regulations pertaining to
tenants and to enforce the same and all other lease provisions; to advise Owner
of tenant complaints and steps taken to remedy the same; to xxx and recover
rents and other sums due; and, when expedient, to settle, compromise and release
such actions or suits or reinstate such tenancies.
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(b)
Repairs. To
cause the Property to be maintained in a first-rate operating condition and to
assure that all equipment is kept in working order and that all service and
maintenance contracts are in force; to make or cause to be made and to supervise
preventive maintenance and repairs and alterations and to decorate on said
premises; to protect the Property from storms upon public warning; and to
purchase supplies at a reasonable price and pay all bills. Manager
shall advise Owner of any violations of building codes and governmental
regulations and shall consult with Owner as to actions to be taken pertaining
thereto. Notwithstanding anything herein to the contrary, Manager
shall not, without prior authority from Owner, make, cause to be made, contract
for, or agree to any one expenditure for repair the total cost of which will
exceed $5,000. This restriction shall apply to the total cost of any
such repair even though undertaken on a partial completion or other basis, where
individual statements or vouchers would not exceed such sum, but where the
entire expenditures would, when the repair work is completed, exceed such
sum.
(c)
Employees. On
behalf of Owner, and subject to Owner's direction and approval, on the basis of
a job description and salary schedule, to train and supervise the work of and to
investigate, hire, pay and discharge employees and independent contractors
working on or on behalf of the Property, the cost of whose salaries and benefits
shall be borne by Owner. Manager agrees to use due care and
businesslike prudence in the hiring of such employees and independent
contractors.
(d)
Insurance. To
advise Owner as to insurance requirements and coverage and, if requested by
Owner, to procure such insurance coverage as Owner shall
request. Manager shall promptly investigate and report to Owner all
accidents or claims for damage and shall cooperate with Owner in filing any
claims or defending any suits in connection therewith. Owner shall
maintain workmen's compensation insurance on personnel employed under paragraph
3(c) and shall also maintain such public liability and other insurance as may be
required by law or this Agreement. Owner authorizes Manager to
prepare for filing by Owner in the name of Owner, all federal, state and local
tax reports relating to the Property. Owner reserves the right to
prepare any of such reports itself and shall advise Manager from time to time of
its decision to do so.
(e)
Compliance with Laws,
Regulations. To be responsible for compliance with all
federal, state and local government laws, ordinances, rules, orders and
regulations pertaining to hiring, payment of wages, job conditions, social
security, taxes and withholdings; to prepare and file all forms, returns or
reports required by law; and to supervise and be responsible for all other
aspects of employee relations.
(f)
Service
Contracts. To make, at a competitive price, on arm's length
and commercially reasonable terms, and enforce contracts for electricity, gas,
water, telephone, rubbish hauling, security, pest control, landscaping, and
other services or such of them as Manager shall deem advisable and to be
responsible for having such services rendered when needed and performed in an
efficient and proper manner. Owner shall assume the obligations of
any contract so entered into at the termination of this
Agreement.
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(g)
Professional
Personnel. To retain, subject to Owner's approval and at
Owner's expense, accountants, attorneys and other professional advisors and
consultants and to authorize such persons to act on behalf of Owner in regard to
activities connected with the Property and Owner's duties with respect
thereto.
(h)
Real
Estate Assessments. To determine the fairness of all real
estate tax assessments and to make timely recommendations as to appropriate
action and, with Owner's approval, to take such action (including any appeals)
at Owner's cost, in timely fashion; and to advise Owner of the dates all taxes
are due, to cause timely payment to be made of such taxes out of Owner's funds
and to give Owner prompt notice of any need for additional funds.
(i)
Monthly
Statements. To maintain an adequate system of office records,
books and accounts with respect to Manager's functions and services hereunder in
accordance with generally accepted accounting principles and practices and to
permit examination by or on behalf of Owner, and to render monthly statements of
receipts, expenses and charges including a schedule of accounts receivable and
payable which shall be sufficiently detailed to reflect fairly the operations of
the Property and upon request of Owner shall include a reconciled bank statement
as of the end of each month, and to remit to Owner, on a monthly basis, receipts
less disbursements. In the event the disbursements shall be in excess
of the rents collected by Manager, Owner hereby agrees to pay such excess
promptly upon demand of Manager, subject to the provisions of paragraph 8
hereof.
4.
Tax
Payments. Manager is hereby instructed and authorized to pay
property taxes, employee taxes and special assessments from Owner's funds to the
extent available from rental revenues received, except that, with the consent of
Owner, Manager shall not pay any taxes or assessments which Manager recommends
that Owner not pay and except further that Manager shall not pay any taxes or
assessments which Owner directs Manager to contest or refrain from
paying. Owner reserves the right to pay any of any such taxes
directly and shall notify Manager of its decision to do so from time to
time.
5.
Manager's
Authority to Act. Manager represents to Owner that it has
obtained or will obtain and will keep in full force and effect during the term
hereof any licenses, permits or other governmental consents required of Manager
in order that Manager may fully perform its duties and obligations
hereunder.
6.
Manager's
Compensation. Owner shall pay Manager for its services
in performing its asset management responsibilities with respect to the Property
in accordance with the terms of this Agreement, an annual asset management fee,
payable monthly, equal to five percent (5%) of the Gross Revenue from the
Property (the “"Compensation"). Any
management fee due to any sub-property manager shall be paid by deducting such
amount from the Compensation. As used herein, "Gross Revenue" shall
mean the entire amount of all revenue, determined on an accrual basis, from (a)
tenant rentals collected pursuant to tenant leases of apartment units, for each
month during the term hereof; provided that there shall be excluded from tenant
rentals any tenant security deposits (except as provided below); (b) cleaning,
tenant security and damage deposits forfeited by tenants in such period; (c)
laundry and vending machines income; (d) any and all other receipts from the
operation of the Property received and relating to the period in question; (e)
proceeds from rental interruption insurance, but not any other insurance
proceeds or proceeds from third-party damage claims, and (f) any other sums and
charges collected in connection with termination of the tenant
leases. Gross Revenue does not include the proceeds of (i) any sale,
exchange, refinancing, condemnation, or other disposition of all or any part of
the Property, (ii) any loans to Owner whether or not secured by all or any part
of the Property, (iii) any capital expenditures or funds deposited to cover
costs of operations made by Owner, and (iv) any insurance policy (other than
rental interruption insurance or proceeds from third-party damage
claims). Such compensation shall be in addition to all costs and
expenses for which Manager is to be reimbursed related to Manager's performance
of the obligations set forth in Section 3(a) through 3(i) of this Management
Agreement. Any or all of the Compensation may be accrued until the
sale of the Property. Notwithstanding the foregoing, Owner shall also
be responsible for paying any construction management fees that Manager is
obligated to pay to any sub-property mangers for the Property.
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7.
Notices. Any
statement, notice, recommendation, request, demand, consent, or approval under
this Agreement shall be in writing and deemed delivered (a) if to Manager, when
delivered to Manager by personal receipted delivery, by United States certified
mail/return receipt requested, or by a recognized overnight courier properly
addressed to Manager (as set forth below), and, (b) if to Owner, when delivered
to Owner by personal receipted delivery, by United States certified mail/return
receipt requested, or by a recognized overnight courier properly addressed to
Owner (as set forth below). Either party may, by written notice,
designate a different address.
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To
Owner:
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RRE
Park Hill Holdings, LLC
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c/o RCP
Park Hill Manager, LLC
Xxx
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx
Xxxxxxxxx Center
Xxxxxxxxxxxx,
XX 00000
Attn: Xxxxx
Xxxxx
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To
Manager:
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Resource
Real Estate Management, LLC.
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Xxx
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx
Xxxxxxxxx Center
Xxxxxxxxxxxx,
XX 00000
Attn: Xxxx
Xxxxxxx
8.
Indemnity. Owner
shall (1) indemnify Manager and save Manager harmless from and against claims,
losses, expenses or liabilities by reason of any cause whatsoever either in and
about the Property or elsewhere resulting from Manager carrying out the
provisions of this Agreement or acting under the direction of Owner, unless such
damages or injuries result from the negligence or willful misconduct of Manager
or its employees; (2) reimburse Manager on demand for any monies which Manager
is required to pay out for any reason whatsoever, either in connection with or
as an expense in defense of any claim, civil or criminal action, proceeding,
charge or prosecution made, instituted or maintained against Manager or Owner,
jointly or severally, resulting from Manager carrying out the provisions of this
Agreement, or which affects or is due to the condition or use of the Property
except for any of the aforesaid resulting from the negligence and/or willful
misconduct of Manager or its employees; and (3) defend promptly and diligently,
at Owner's sole expense, any claim, action or proceeding brought against
Manager, or Manager and Owner jointly or severally, arising out of or in
connection with any of the foregoing; and to hold harmless and fully indemnify
Manager from any judgment, loss or settlement on account thereof, except for any
claim, action or proceeding resulting from the negligence or willful misconduct
of Manager or its employees or agents. It is expressly understood and
agreed that the foregoing provisions of this paragraph shall survive the
termination of this Agreement. As used in this paragraph, Manager
shall be deemed to include Manager’s officers, directors, shareholders and
employees.
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9.
Insurance. Owner
shall include in each of its fire and extended coverage insurance policies
covering the Property a waiver of the insured's right of subrogation against
Manager. Owner shall list Manager as an additional insured, but not a
party to whom any loss shall be payable, in any policy of general liability
insurance in connection with the Property. Owner shall furnish
Manager with a copy of any such policy within thirty (30) days of assumption by
Manager of its duties hereunder. It is further understood and agreed
that thirty (30) days written notice be given Manager in the event of
cancellation or reduction in coverage of said policies.
10.
Defaults. The
occurrence of any one or more of the following acts or events with respect to
either party, which act or event shall continue for 15 days after written notice
from the other party, shall be a violation of this Agreement which shall entitle
the other party to immediately terminate this Agreement by notice to such
defaulting party, whereupon, after giving of such notice, this Agreement shall
terminate without further liability on the part of either party (except Owner's
obligation to pay to Manager its Compensation and reimbursement of expenses
incurred by Manager, for which documentation has been submitted, up to the date
of termination) and Manager shall forthwith turn over all books, records, leases
and contracts relating to the property to Owner: (1) an admission in
writing by either party of its inability to pay its debts generally as they
become due; (2) the filing by or against either party (and if against either
party, if the same is not withdrawn, discharged or otherwise terminated within
sixty (60) days), of a petition in bankruptcy for reorganization or to take
advantage of an insolvency statute; (3) an assignment for the benefit of either
party's creditors; (4) a consent by either party to the appointment of a
receiver of itself or of the whole or any substantial part of its property; or
(5) the failure to comply with any of the terms and/or conditions contained in
this Agreement.
11.
Independent
Contractor. Notwithstanding anything herein to the contrary,
the relationship of Manager (and any and all employees or persons utilized) and
Owner shall be that of independent contractor and in no event shall the
relationship between Owner and Manager be deemed to be that of
employer-employee, joint venture or partnership.
Nothing
in this Agreement or in any other instrument shall cause Manager in any way to
be construed as a partner, joint venturer or associated in any way with Owner in
the ownership of the Property or subject Manager to any obligation, loss, charge
or expense connected with or arising from the ownership of said Property or part
thereof.
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12.
Miscellaneous.
(a)
Each provision of this Agreement is intended to be
severable. If any term or provision hereof shall be determined by a
court of competent jurisdiction to be illegal or invalid for any reason
whatsoever, such provision shall be severed from this Agreement and shall not
affect the validity of the remainder of this Agreement.
(b)
In the event either of the parties to this Agreement
shall institute any action or proceeding against the other party relating to
this Agreement, the unsuccessful party in such action or proceeding shall
reimburse the successful party for its disbursements incurred in connection
therewith and for its reasonable attorney’s fees. If not paid when
due, any unpaid amounts due under this Agreement shall accrue interest at a rate
of one percent (1%) per month, or the maximum interest rate as then permitted by
applicable law, if lesser.
(c)
No consent or waiver, express or implied, by either party
hereto of any breach or default by the other party in the performance by the
other of its obligations hereunder shall be valid unless in writing, and no such
consent or waiver shall be deemed or construed to be a consent or waiver to or
of any other breach or default in the performance by such other party of the
same or any other obligations of such party hereunder. Failure on the
part of either party to give notice of any act or failure to act of the other
party or to declare the other party in default, regardless of how long such
failure continues, shall not constitute a waiver by such party of its rights
hereunder. The granting of any consent or approval in any one
instance by or on behalf of Owner shall not be construed to waive or limit the
need for such consent in any other or subsequent instance.
(d)
The venue of any action or proceeding
brought by either party against the other arising out of this Agreement shall,
to the extent legally permissible, be in Philadelphia,
Pennsylvania.
(e)
Owner and Manager agree that the Property will be
offered for lease in compliance with all applicable federal, state, and local
anti-discrimination laws and regulations.
(f)
Owner agrees (i) that Manager shall have no
responsibility or liability to any person or entity (including any governmental
authority) arising out of the presence of any adverse physical or environmental
conditions affecting the Property including, but not limited to (a) structural,
mechanical, and soil conditions, and (b) the presence and location of asbestos,
if any, PCB transformers, if any, and other hazardous substances or underground
storage tanks on or about the Property, (unless the condition is caused by
Manager, its agents or employees), or out of any non-disclosure thereof by
Manager pursuant to Owner’s requirements, and (ii) to indemnify and hold
harmless Manager from and against all claims, damages, liabilities and expenses
made or incurred by lessees, leasing prospects and/or others claiming damage or
loss as a result of (A) the presence of any such physical or environmental
conditions; (B) Owner’s failure to disclose same to Manager; and/or (C) any
requirement of Owner which has the effect of prohibiting Manager from disclosing
to any leasing prospect the existence of any such physical or
environmental conditions affecting the Property where the failure to make such
disclosure gives rise to a claim of liability for damage or loss by such lessee
or leasing prospect, provided the indemnity under the preceding clause (A) shall
not apply to any claim asserted against Manager arising out of Manager’s failure
to disclose any such matter to a leasing prospect where the matter at issue was
in fact disclosed by Owner to Manager Agent and where Owner authorized Manager
to disclose such matter to such leasing prospect, but Manager, nevertheless,
failed to make such disclosure to such leasing prospect.
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(g)
This Agreement embodies the entire agreement
between Owner and Manager as to the subject matter herein contained and any
amendment, modification or supplement to this Agreement must be in writing and
signed by all of the parties hereto.
(h)
This Agreement shall be binding upon the successors and
assigns of Manager and Owner, and shall be governed by the law of the
Commonwealth of Pennsylvania.
(i)
Captions and paragraph headings used herein are for convenience only
and are not part of this Agreement and shall not be used in construing
it.
(j)
This Agreement may be executed in one
or more counterparts, all of which, taken together, shall constitute a complete
original Agreement.
13.
Lender
Provisions. For so long as Lender is the holder of the Loan,
following an Event of Default under the Mortgage (after the expiration of any
notice and cure periods under the Mortgage, if any), the holder of the Mortgage,
at its option, may terminate this Agreement, without penalty, by delivering
written notice of such termination to Owner and Manager.
[SIGNATURES
CONTAINED ON FOLLOWING PAGE]
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IN
WITNESS WHEREOF, each party has caused its duly authorized representatives to
execute and deliver this Asset Management Agreement as of the date first above
written.
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OWNER:
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RRE
PARK HILL HOLDINGS, LLC, a Delaware limited liability
company
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By:
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RCP
Park Hill Manager, LLC, its manager
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By:
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Name:
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Title:
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MANAGER:
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RESOURCE
REAL ESTATE MANAGEMENT, LLC, a Delaware limited liability
company
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By:
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Name:
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Title:
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