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Memorandum
Tuesday. January 22, 2013
TO: Redevelopment Commission
FROM: Don Inks
Investment
SUBJECT: Various Estoppels related to Multi -story Office Building at Northeast Corner of
Washington & Michigan
This property is currently owned by an out of town investment group and is being sold to another
investment group. The property is currently occupied by 151 Source Bank and several office tenants.
The Doubletree Hotel is a separate property and not a part of this transaction. The estoppels are to
provide the purchaser with information on the current status of various documents, including the
Ground Lease and Memorandum of Understanding among others. These estoppels indicate that all
the terms of these documents are currently being met to the best of the Redevelopment
Commission's knowledge.
227 W. JEFFERSON BLVD. SOUTH BEND. IN 46601 1 P: 574 - 235 -9371 1 FAX: 574 - 235 -9021 1
(,A�q)
GROUND LEASE /MOU ESTOPPEL CERTIFICATE AND AGREEMENT
PWA South Bend, LP
c/o PWA Real Estate, LLC
4900 Perry Highway, Suite300
Pittsburgh, PA 15229
Attn: John M. Schneider
"Irs 1
The Royal Bank of Scotland plc
c/o RBS Financial Products Inc.
600 Washington Boulevard
Stamford, Connecticut 06901
Attention: Real Estate Advisory
Re: That certain Ground Lease Agreement for Private Development dated October 22, 1979
between City of South Bend Department of Redevelopment, as lessor ( "Landlord ") and
FBT Bancorp, Inc. (N/K/A 15' Source Corporation) ('T' Source "), as lessee, which was
recorded on November 13, 1979 as Document Number 7925386 in the Office of the
Recorder of St. Joseph County, Indiana, as amended by (a) Assignment of Ground Lease
dated March 15, 1981 by and between Is' Source, as assignor, and First Bank Center
Limited Partnership ( "Center "), as assignee, recorded on March 27, 1981 as [Document
No. 8104577 and Document Number 8104580] in the Office of the Recorder of St.
Joseph County, Indiana, (b) that certain First Amendment to Ground Lease dated March
12, 1982 by and between City of South Bend Department of Redevelopment, as lessor
and Center, as lessee, which was recorded on April 21, 1982 as Document Number
8205492 in the Office of the Recorder of St. Joseph County, Indiana and (c) Certificate of
Completion granted by the City of South Bend Department of Redevelopment, lessor to
I" Source dated April 12, 1982 and recorded April 13, 1982 as Document Number
8205043 in the Office of the Recorder of St. Joseph County, Indiana (collectively, the
"Ground Lease "), as assigned by Center to PWA South Bend, LP ( "Lessee ") by
[Assignment and Assumption of Ground Lease] made by Center and Lessee of even date
herewith and intended to be recorded in the Office of the Recorder of St. Joseph County,
Indiana (the "Assignment ").
And
Re: That certain Memorandum of Understanding (the "MOU ") dated effective as of
December 3, 2010, and among the City of South Bend, Indiana, by and through its Board
of Public Works (the "City "), Landlord, 1 st Source, and Host Hotels & Resorts, L.P.
Ladies and Gentlemen:
K tdr?5Vl &l4dwn document property name.
DOCS- a3 964 -V3
This letter agreement is delivered at your request to evidence and set forth certain matters
with respect to the referenced Ground Lease. Pursuant to the Ground Lease, Landlord has leased
to Lessee (as the assignee of Center, as the assignee of I" Source), and Lessee (as the assignee of
Center, as the assignee of I" Source) has leased from Landlord, the land located in South Bend,
St. Joseph County, Indiana, as legally described in Exhibit A of the Ground Lease (the
"Premises "). The Premises is presently improved with a multi -story office building, related
surface parking and other ancillary improvements (the "Improvements "), which are owned by
Lessee, subject to the terms and conditions of the Ground Lease. (and the term "Premises,"
includes any rights or interests of Landlord in the Improvements).
Landlord hereby certifies and agrees as follows:
1. True Correct and Complete Copies. A true, correct and complete executed copy
of the Ground Lease is attached hereto as Exhibit A -1. The Ground Lease set forth on Exhibit
AA =1, as amended by and together with this letter agreement, constitutes the entire agreement
between Landlord and any of 1" Source, Center or Lessee with respect to the Premises, except
for the MOU. A true, correct and complete executed copy of the MOU is attached hereto as
Exhibit A -2.
2. Landlord's Title. Landlord is the fee simple owner of the Premises, and except as
provided in the Ground Lease or pursuant to documents of record, it has not granted, conveyed,
sold, assigned, leased, mortgaged, transferred or pledged any interest in the Premises, in the
Ground Lease or in the rents received therefrom.
3. Completion of Improvements; Termination of Urban Renewal Plan. The
Improvements have been completed and Landlord has issued its Certificate of Completion. The
Urban Renewal Plan has terminated and is no longer in force or effect.
4. Assig_nent to Lessee. Landlord acknowledges that the assignment of the Ground
Lease effected by the Assignment is permitted under the Ground Lease. Lessee is lawfully in
possession of the Premises under the Ground Lease and, pursuant to the Assignment, is the
lessee under the Ground Lease, and the Ground Lease is in full force and effect, has not been
canceled, modified, extended or amended (except pursuant to a document attached hereto as
Exhibit A).
5. Rent. The fixed annual rent required by the Ground Lease, which is $7,387.00
per year as of the date hereof, has been paid through tail 30, January 31. 2013. There are
currently no other charges (including percentage rent) due and payable to Landlord by or on
behalf of the lessee under the Ground Lease.
6. No Default. Neither Landlord nor Lessee (nor any predecessor in interest to
Lessee) is in default under the Ground Lease, nor is Landlord aware of any event which, with the
passage of any applicable cure periods would constitute a default of Landlord or Lessee under
the Ground Lease.
2
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7. No Bankruvtcv. There are no actions, voluntary or otherwise, pending or to
Landlord's knowledge threatened, against Landlord under any bankruptcy, reorganization,
insolvency or similar federal or state law.
8. No MOU Default. To the best knowledge of Landlord, no party is in default
under the MOU, nor is Landlord aware of any event which, with the passage of any applicable
cure periods would constitute a default of any party under the MOU.
9. Completion of I" Source Improvements. The City, acting through its Department
of Economic Development, has approved the completion of the 1st Source Improvements, as
described in the MOU.
10. Atrium Improvements. The Atrium Improvements, as described in the MOU,
which require completion are as described on Exhibit B attached to this letter agreement.
11. Agreement to Convey Fee. Upon completion of Atrium Improvements and
satisfaction of the requirements of Indiana Code §3- 36- 7- 14 -22, Landlord will convey the
Premises to the then - current lesseeLessee under the Ground Lease. Lessee acknowledges and
agrees that upon any such conveyance, the fee title to the Premises shall be subject to and
encumbered by the RBS Mortgage (as hereinafter defined).
12. RBS Mortgage. Landlord acknowledges that The Royal Bank of Scotland plc
( "RBS," and together with its successors and assigns, "Lender ") has maclewill make a mortgage
loan in the original principal amount of $10,700,000.00 to Lessee to finance Lessee's acquisition
of the Premises and the Improvements, and such mortgage loan iswill be secured by an
assignment of the Ground Lease and a mortgage upon the ground lease estate under the Ground
Lease and fee title to the improvements, together with all of Lessee's rights pursuant to the MOU
to obtain fee title to the Premises as described in paragraph 11 hereof (collectively, and as the
same may hereafter be amended, restated, modified and supplemented from time to time, the
"RBS Mortgage "). Landlord acknowledges that the RBS Mortgage is permitted under the
Ground Lease, and acknowledges and agrees that the RBS Mortgage is a "Mortgage" within the
meaning of the Ground Lease for all purposes under the Ground Lease and that Lender
(including, without limitation, all successors and assigns of RBS) is a "Mortgagee" within the
meaning of the Ground Lease for all purposes thereunder. All certifications of Landlord herein
assume that the RBS Mortgage shall be executed and recorded in accordance with Indiana law.
13. No Merger. Landlord and Lessee each agrees, that any deed conveying fee
simple title to the Property to the Lessee pursuant to Section 1201 of the Ground Lease, pursuant
to the MOU or otherwise shall provide that such title is subject to the leasehold estate created by
the Ground Lease, and such leasehold estate shall not be merged with the fee simple title thereby
conveyed without the prior written consent of Lender.
14. madified, eaneeled of terminated by agreenient of Landlerd and Lessee
may not be without p tieY "'fie en "R°°°"` Rf Lender.! ` Notices. Landlord shall provide,
simultaneously with its provision to Lessee, a copy of any notice of any default, breach, failure,
violation or termination of the Ground Lease to Lender, and no notice of default, breach, failure,
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DOGS- #3806964 -V3
violation or termination of the Ground Lease shall be effective against Lender unless such notice
is given in writing to Lender at the following address or such other address as Lender may
designate from time to time in a written notice to Landlord:
The Royal Bank of Scotland plc
c/o RBS Financial Products Inc.
600 Washington Boulevard
Stamford, Connecticut 06901
Attention: Real Estate Advisory
Facsimile No. (203) 873 -4670
and
The Royal Bank of Scotland plc
c/o RBS Financial Products Inc.
600 Washington Boulevard
Stamford, Connecticut 06901
Attention: Legal Department
Facsimile No. (203) 873 -4670
with a copy to:
Klehr Harrison Harvey Branzburg LLP
1835 Market Street, Suite 1400
Philadelphia, PA 19103
Attention: Jon S. Robins, Esq.
Telecopier: (215) 568 -6603
Any and all notices given hereunder shall be given in accordance with Section 12 of Part
I of the Ground Lease. Landlord F that aa_°....remains as set r 44h in c° °t:°
f Paf4 I of the G -°.. °a T ease Any notices given to Landlord under the Ground Lease should
be given at the following address or such other address as Landlord may designate from time to
time with written notice to Lender:
Executive Director
Department of Community Investment
225 West Jefferson Blvd Suite 1400 S
South Bend, In. 46601
with a cony to:
Office of the City Attorney
Attn• Aladene DeRose
1200 City County Building
16 T d ! R' ht Landlord agrees that it may nat ° ° ° y remedy upen
4
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DOCS-gMWO4
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eammereially reasonable diligenee, to eufe sueh Pefault-.-Z27 West Jefferson Blvd
South Bend, IN ..0
47-.15. Substitute Tenant Subiect to Mortgage. Landlord acknowledges and agrees that
any nomination, designation and substitution of any tenant under or pursuant to Section 13 of
Part I of the Ground Lease shall not result in any merger of the fee and leasehold estates and
shall not result in any discharge of the RBS Mortgage, and, in the event of any such substitution,
the substitute tenant shall be bound by the RBS Mortgage and the leasehold estate held by it
under the Ground Lease shall remain subject to the RBS Mortgage. Unless s,.eh substitute tenant
4-8-16. Lender New Lease Right. Landlord hereby covenants and agrees that upon any
termination of the Ground Lease for any reason, including, without limitation, as a result of a
default thereunder or as the result of the Ground Lease being rejected by Lessee in any
bankruptcy of the Lessee, Landlord shall provide notice to Lender. and Lender shall have
until right within anv time within six months from the date that is sixty (60) days (or sue'
lenger period as may be provided in Seetion 1401 of the Ground Lease4 ffam aftef Lendefis
ir ..
f written nati,... of ..,.eh te_fnination 4em Landlord h i - h h f such notice to elect
to enter into a new ground lease for the Premises. Any such new ground lease shall be upon the
same terms and conditions as provided for new ground leases under Section 1401(a) of Part II of
the Ground Lease; provided that it is expressly agreed that the lessee under any such new ground
lease shall have all of the options to extend set forth in Section 3 of Part I of the Ground Lease
and shall have the rights to acquire fee title to the Premises provide for in Section 2(h) of the
MOU and shall also have the rights to acquire a 30% interest in fee title to the Garage (as defined
in the MOU) as contemplated by the MOU and as provided for in the Operation, Maintenance
and Easement Agreement dated as of October 22, 1979, as amended by First Amendment thereto
dated as of January 12, 1982, Second Amendment thereto dated as of May 1, 1987, Third
5
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Amendment thereto dated as of December 28, 2010 and Fourth Amendment thereto dated as of
August 4, 2011, made by and among Lessee (as successor to I" Source and Center), Jenna Hotel
Investments, LLC (as successor to Rahn Properties II, South Bend Joint Venture and Host Hotels
& Resorts, LP), and Landlord.
4 -9-17. No FHA. By its acceptance of this letter agreement, Lender represents to
Landlord that the RBS Mortgage is not insured by the FHA, and Landlord hereby acknowledges
that for so long as the RBS Mortgage is not insured by the FHA, the FHA shall not have any
right to a new ground lease under such Section 1401 or any other rights under the Ground Lease.
Any rights of FHA provided for in the Ground Lease shall belong to Lender (for so long as the
RBS Mortgage is not insured by the FHA).
2&18. No Bonds. Landlord hereby certifies for the benefit of Lender that there are no
outstanding bonds or other similar long -term obligations issued by the Landlord or any related
governmental subdivision, agency or authority with respect to the Premises.
21 GenderAnation and r a n a SE) long as the Loan, of
the seour-ed by the RBS Me—gaeg-ef-effl.-ains Outstanding and unpaid and the RBS
Mei4gagee --_—ains ef F-eeafd, 44 the sake ef elafifying the intent of Seetiens 1102 and 1103 of
the Gfeund Lease; Landlord and Lessee aeknowledge that afty and all eendemnation PFOeeedS;
shall fifst be paid to Lender to he applied to the festeration and Feplaeefnent of the Prefflises a
the imprAvements in neeordanee with the temis of the Gfound Lease and the RBS Wi4gage te
the extent that the Grou"d Lease is not teFminated and that stteh restefatien and replaeement i
peffnittej under eaeb of the Ground Lease and the RBS Wf4gage, and then (or to the extent t
the Greand Lease is terminated of that the fefegoing is nat so pemiitted) to the pa��ent in full -af
2-2-.19. Reliance. Landlord agrees that this letter agreement may be relied upon by
Lender, its successors and assigns and any nationally recognized statistical rating agency rating
any securities issued in connection with the Loan or any portion thereof, and that Lender is an
intended third party beneficiary hereof. Lender agrees that this letter agreement m aybe relied
upon by Landlord its successors and assigns and that Landlord is an intended third part_
beneficiary hereof. This letter agreement shall inure to the benefit of Lender, its successors and
assigns (including, without limitation, each and every owner and holder of the Loan and each
person who may succeed to Lessee's interest under the Ground Lease) and shall be binding on
Landlord, its heirs, legal representatives, successors and assigns. This letter agreement shall inure
to the benefit of Landlord its successors and assigns and shall be binding on the Lender, its legal
representatives, successors and assigns. No consent of Landlord shall be required to any
assignment of the Loan or any portion thereof by Lender or any of its successors or assigns. No
consent of Lender shall be required to any assignment of the Ground Lease or any portion
thereof by Landlord or any of its successors or assigns Landlord and the persons executing this
certificate on behalf of Landlord have the power and authority to execute this letter agreement.
Lender and the persons executing this certificate on behalf of Lender have the power and
authority to execute this agreement.
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DOS #3806964 -V3
2-3-2.
0 Waiver. Lender may, without affecting the validity of this letter agreement,
extend the time for payment of the Loan or alter the terms and conditions of any Loan
Agreement, including, but not limited to, any note evidencing all or any part of the Loan and the
RBS Mortgage, without the consent of, or notice to, Lessor and without in any manner impairing
or otherwise affecting Lender's rights.
24.21. Letter Agreement Controls. Landlord and Lessee covenant and agree that the
terms of this letter agreement shall govern and control over any inconsistent or contrary
provision set forth in the Ground Lease or the MOU. Landlord and Lessee acknowledge and
agree that Lender is a third party beneficiary of this letter agreement. Landlord and Lessee
acknowledge and agree that either of them or Lender may record this letter agreement in the
Office of the Recorder of St. Joseph County, Indiana.
2522. Recitals and Exhibits. All of the recitals hereto and all of the exhibits hereto are
hereby incorporated herein and made a part hereof.
26-.23. Headings. The headings herein are for convenience only and are not part of the
provisions hereof and shall not be construed to limit, expand or otherwise modify and provision
hereof.
IN WITNESS WHEREOF, Landlord and Lessee have each authorized the execution of
this Ground Lease /MOU Estoppel Certificate and Agreement as of the _ day of January, 2013.
CITY OF SOUTH BEND REDEVELOPMENT COMMISSION
Attest:
PWA SOUTH BEND, LP
By: PWA FBS, LLC,
its general partner
go
Name:
7
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DOGS- #3806964 -V3
STATE OF INDIANA
SS:
ST. JOSEPH COUNTY
Before me the undersigned, a Notary Public in and for said State, personally appeared
the of the South Bend Redevelopment
Commission, and acknowledged the execution of the foregoing Ground Lease /MOU Estoppel
Certificate and Agreement on this day of January, 2013.
Witness my hand and notarial seal.
(SEAL)
My Commission Expires:
My County of Residence is:
STATE OF
COUNTY
SS:
(Written Signature)
(Printed Signature)
Before me the undersigned, a Notary Public in and for said State, personally appeared
, the of PWA FBS, LLC, General Partner
of PWA South Bend, LP, and acknowledged the execution of the foregoing Ground Lease /MOU
Estoppel Certificate and Agreement on this day of January, 2013.
Witness my hand and notarial seal.
(SEAL)
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pQQS- oe o4-v3
(Written Signature)
(Printed Signature)
My Commission Expires:
My County of Residence is:
THE CITY OF SOUTH BEND JOINS IN THIS ESTOPPEL CERTIFICATE SOLELY AS TO
THE FOLLOWING:
1. To the best knowledge of the City, no party is in default under the MOU, nor is
the City aware of any event which, with the passage of any applicable cure periods would
constitute a default of any party under the MOU.
2. The City, acting through its Department of Economic Development, has approved
the completion of the 1 st Source Improvements, as described in the MOU.
3. The Atrium Improvements, as described in the MOU, which require completion
are as described on Exhibit B attached to this letter agreement.
The City hereby acknowledges that Lender is making the Loan to finance Lessee's
acquisition of the Premises and the Improvements. This agreement and certification may be
relied upon by RBS and Lessee and their respective successors and assigns.
IN WITNESS WHEREOF, the City has authorized the execution of this agreement and
certification this day of January, 2013.
CITY OF SOUTH BEND,
acting by and through its Board of Public Works
By Attest:
STATE OF INDIANA )
SS:
ST. JOSEPH COUNTY )
9
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D9cs -U-80696V3
Before me the undersigned, a Notary Public in and for said State, personally appeared
the of the City of South Bend, Indiana,
acting by and though its Board of Public Works, and acknowledged the execution of the
foregoing Ground Lease /MOU Estoppel Certificate and Agreement on this day of
January, 2013.
Witness my hand and notarial seal.
(SEAL)
My Commission Expires:
My County of Residence is:
10
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QQQS- 449
(Written Signature)
(Printed Signature)
Exhibit A -1 to Estoppel Certificate
Ground Lease
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DqC543806964 -V3
Exhibit A -2 to MOU
Well1
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pQ[Q�806964 -V]
Exhibit B to Estoppel Certificate
List of Remaining Atrium Imnrovements
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))OCS- N3R06964 -V3
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