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Número de

Contrato:

2017-PRH106-A

Número de

cuenta:

N/A

FIRST AMENDMENT TO GROUND LEASE AGREEMENT

This FIRST AMENDMENT TO GROUND LEASE AGREEMENT (this "Amendment") is made as of August 11, 2017 (the "Effective Date"), by and between PUERTO RICO HOUSING FINANCE AUTHORITY, public corporation chartered by the Government of Puerto Rico under Law Num. 103-2001 (hereinafter called "PRHFA" or "Lessor") and PUTNAM LAC HOLDING, LLC, a limited liability company organized under the laws of Delaware duly authorized to do business pursuant to the laws of the Government of Puerto Rico (hereinafter called "Lessee").

W 1 T N E S S E T H:

WHEREAS, by Ground Lease Agreement dated as of October 14, 2016 (the "Ground Lease"), Lessor did demise and let unto Lessee, and Lessee did hire and take from Lessor, various contiguous parcels ofland recorded and identi:fied as Lots 195, 196 and 197, comprising approximately 4.23 acres, equivalent to 17,101.9711 square meters of land, adjacent to the Museo de Arte De Puerto Rico ("MAPR"), bordering De Diego Avenue and Antonsanti Street, in Santurce, Puerto Rico, more particularly described in Exhibit "A" annexed and made a part of the Ground Lease;

"A" annexed and made a part of the Ground Lease; WHEREAS, Lessor has requested, and Lessee
"A" annexed and made a part of the Ground Lease; WHEREAS, Lessor has requested, and Lessee

WHEREAS, Lessor has requested, and Lessee has agreed, to amend the Ground Lease (i) in order to provide for the prepayment of the rent by the Lessee for the :first :fifteen (15) years of the term of the Ground Lease, and after that date Lessee will commence to pay monthly base · rentpursuant to the rent schedule that was established under the Ground Lease, but subject to the right of Lessee to termínate the Ground Lease as provided under the Ground Lease; (ii) based on the new base rent structure that has been negotiated by the parties, to delete the provisions of the Ground Lease requiring a security deposit from Lessee as a condition to the effectiveness of the Ground Lease; and (iii) to establish a revised due diligence period before Lessee has to proceed with the development and construction of the Improvements on the Premises and has to commence to pay rent;

WHEREAS, in order to increase the green recreational area within the Premises and maximize the ecological footprint that the Santurce Park will provide to the Santurce community and in consideration of the fact that an af:filiate of Lessee is building approximately 200 parking spaces on a separate property known as Stop 22, adjacent to the Premises, that will be available for use by the general public, the Ground Lease will be amended to delete the obligation of Lessee under the Ground Lease to construct 200 parking spaces within the Premises in order to increase the green recreational space within the Premises; and

WHEREAS, ata meeting ofthe Board ofDirectors of Lessor held on July 10, 2017, said Board of Directors approved resolution number 2017-17 authorizing the execution by Lessor of this Amendment, as evidenced by a Certificate of Corporate Resolution dated August 3, 2017 executed by Margarita Cintrón Solla, in her capacity as Secretary of the Board of Directors of Lessor, a copy ofwhich is attached to this Amendment as Exhibit 2.

NOW, THEREFORE, for and in consideration of the mutual covenants herein contained and other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:

l. Defmitions.

All capitalized terms used but not defined herein shall have the

meanings ascribed thereto in the Ground Lease.

2. Amendments to Lease.

a. The title of the Ground Lease is hereby amended as of the Effective Date to read in its entirety as follows:

"GROUND LEASE to PUTNAM LAC HOLDING, LLC FOR DEVELOPMENT OF A PUBLIC PARKAT LOTS 195, 196 & 197, SANTURCE, PR"

b. Section 1. M. is hereby amended in its entirety as of the Effective Date to

hereby amended in its entirety as of the Effective Date to read as follows: "Evaluation Period"

read as follows:

"Evaluation Period" shall mean the period of time commencing on the date ofthis Lease and ending on February 28, 2018. If as ofthe original Evaluation Period (or any extension thereto provided hereunder} Lessee has not completed all the studies deemed necessary by the Lessee for the development of the Improvements on the Premises or Lessee has not obtained all of Lessee's Permits and all appeal periods with respect thereto shall have expired with no appeals- having been taken, then Lessee shall have the right to extend the Evaluation Period for two additional periods of sixty-one (61) days each, the first of such period expiring on April 30, 2018 and the second of such periods expiring on June 30, 2018. Lessee shall notify Lessor, in writing, of its election to extend the Evaluation Period prior to the last <lay of the Evaluation Period then in effect."

b. Section 3 of the Ground Lease is hereby amended as of the Effective Date

to read in its entirety as follows:

"A. Term. The initial term of this Lease ("Term") shall commence on the date on which Lessor delivers possession of the Premises to Lessee in the manner and condition provided in Section 3. B below, and Lessee accepts possession in accordance with the terms and conditions of this Lease (the "Commencement Date"), and shall expire fifteen (15) years from that date, all subject to all terms and conditions of this Lease. Lessee shall have the right to extend the Term of this Lease for three (3) consecutive periods, the first of such periods of three (3) years and the next two periods of six (6) years each, under the same terms and conditions hereof

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(except for Base Rent, which shall be based on the schedule set forth in Section 4. A. below), by notifying Lessor in writing at least ninety (90) days prior to the expiration ofthe then current Term.

B. Evaluation Period.

(1) During the Evaluation Period, Lessee rnay enter upon the Prernises and conduct tests, inspections, surveys and studies (including, without lirnitation, soil, environrnental, physical, rnechanical and structural) which Lessee rnay deern appropriate to determine the suitability of the Prernises for Lessee's use; conduct a title search and order a title cornrnitrnent with respect to the . Prernises; and review applicable zoning and land use laws. Lessee agrees to protect and hold Lessor harrnless frorn any liability or loss incurred by Lessor as a result of Lessee's activities at the Prernises during the Evaluation Period and to prornptly restore any darnage ·caused ·to ·the Prernises as a result of Lessee's activities, if Lessee <loes not proceed with this Lease.

(2) Within sixty (60) days after receipt of notice frorn Lessee, Lessor shall cure any encroachrnent, encurnbrance or other defect disclosed by any survey or title information which shall not be acceptable_to Lessee. Within sixty (60) days after receipt of an Environrnental Site Assessrnent which reveals the presence of any Hazardous Substances or underground storage tanks on the

Prernises, Lessor shall rernediate any Hazardous Substances to a standard permítting the unrestricted future use of the Prernises and rernove any underground storage tanks, and any associated Hazardous Substances, provided that Lessor rnay notify Lessee, in

Lessor' s sole discretion, of Lessor' s election to termínate

if the cost to cure any encroachrnent, encurnbrance or title defect, or

this Lease

rernediation work associated to the presence of any Hazardous Substance on the Prernises will exceed the sum of $ 100,000.

(3) lf Lessor fails to perform its obligations pursuant to subparagraph (2) above, then within fifteen (15) days after the expiration of said sixty (60) <lay period, Lessee rnay notify Lessor of Lessee's election to termínate this Lease. Upon such termination by Lessee, Lessor shall have no liability or responsibility upon Lessee's election to termínate the Lease pursuant to subparagraph (2) of this Section 3.B.

(4) In addition, Lessee rnay termínate this Lease at any time prior to the expiration of the Evaluation Period if, in Lessee's sole, but reasonable, discretion, Lessee is not satisfied with the results of any test, inspection, survey, or study performed by Lessee, or with

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any other condition relating to the Premises, including, without limitation, title, zoning laws, land use laws, or status of permits or approvals.

(5) Whether or not this Lease shall be terminated pursuant to this Section 3. B, Lessee shall have no liability with respect to any Hazardous Substances or underground storage tanks discovered as a result of any tests, inspections or studies performed by Lessee hereunder.

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(6) Notwithstanding anything to the contrary in this Lease, in no event shall Lessee be obligated to accept possession of the Premises until all due diligence has been completed, all the "Permits" have been issued to Lessee and Lessor can deliver to Lessee peaceful possession as tenant of all the land that is part of the Premises free of any occupants or squatters, other than the Condemned Parcel. "Permits" shall mean Lessee's construction permit and any other licenses, permits or approvals issued by any governmental or quasi- govemmental authority necessary to enable Lessee to perform any necessary alteration or demolition of existing buildings or improvém.ents and to perform its initial construction on the Premises pursuant to this Lease. In addition, "Permits" shall include any zoning variance, special use permit, street or alley abandonment, or

for Lessee to operate the Premises as

contemplated under this Lease without restriction (including without restriction as to operating hours except as required by applicable law). It shall be Lessee's obligation to pay for all engineering and survey consultants and reports required in order for Lessee to obtain site plan approval and all other permits and approvals from all

govemmental authorities required for construction of the Improvements on the Premises. Lessee's Permits shall also include, without limitation, zoning approval, ante-proyecto approval, all approvals for access to and from the Premises as per Lessee's requirements, environmental approvals, water and sewer approvals and electric, telephone and power approvals from the appropriate govemmental authorities to enable the Premises to be developed for Lessee's intended use as contemplated under this Lease. Lessor hereby agrees to cooperate with Lessee in obtaining all the Permits and hereby authorizes Lessee to file all applications for the Permits in the name ofthe Lessor.

_the

Jike

necessary

(7) Unless, on or before the expiration of the Evaluation Period, Lessee shall have obtained all of Lessee's Permits, and all appeal periods with respect to all of such permits and approvals shall have expired with no appeals having been taken, at any time thereafter (but prior to the acquisition by Lessee of Lessee's Permits and the

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expiration of all appeal periods with respect thereto, with no appeals having been taken), Lessee may termínate this Lease upon thirty (30) days' notice to Lessor, and this Lease will so termínate unless, prior to the expiration of said thirty (30) days, Lessee shall have obtained all of Lessee's Permits and such appeal periods shall have expired with no appeals having been taken.

(8) Provided that this Lease has not been terminated by Lessee on or prior to the expiration of the Evaluation Period as provided in this Section 3. B., then if, on or before the expiration of the Evaluation Period, possession of the Premises has not been delivered to Lessee by Lessor, then at any time thereafter (until such possession is so delivered), Lessee may, at Lessee's sole option, termínate this Lease upon thirty (30) days' notice to Lessor, and this Lease will so termínate unless, prior to the expiration of said thirty (30) days, Lessor shall deliver possession of the Premises to Lessee in accordance with the terms hereof.

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Notwithstanding anything to the contrary in this Lease, in no

event shall Lessee be obligated to accept possession of the Premises until Lessee shall have:

(9)

(i) received a leasehold policy oftitle insurance to be paid by Lessee with respect to the Premises, which policy shall be satisfactory to Lessee;

(ii) received and presented for recording this Lease pursuant to Section l 4 hereof; and

'(iii) approved, in Lessee's reasonable discretion, the form and substance of all easements providing utilities, or access for the Premises, and received from Lessor and Lessor shall have presented for recording same.

(10) Lessor shall deliver to Lessee within ten (10) days after receipt ofLessee's request therefor:

(i) any documents reasonably required by Lessee's title

insurance company to remove the standard title exceptions from Lessee's title commitment and subsequent title policy, including, without limitation, an Owner's Title Affidavit in customary form sufficient to delete any exceptions for parties in possession and

mechanics' or materialmen's liens;

(ii) any documents reasonably required by Lessee's title

company evidencing Lessor's authority to enter into this Lease and

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other documents required to be executed by Lessor, including, without limitation, certifications, votes and other documentation relating to Lessor' s organizational structure; and

(iii)

any

other

documentation

"Requirements" section of Schedule B or B-1

commitment.

listed

the

of Lessee's title

in

(11) The conditions in Paragraphs 3 B. (9) and (10) above shall also apply to the Condemned Parcel and the inclusion of such parcel under this Lease shall be subject to the satisfaction of those conditions.

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(12) Lessor hereby agrees to cooperate with Lessee and hereby authorizes Lessee to negotiate with the Municipality of San Juan the exchange of the parcel of land shown in Exhibit A-2 hereto that is part of the ·Premises, which segregated parcel shall be used for the expansion of the Antonsanti Street, in exchange for a road of the Municipality of San Juan that is no longer in use and that is part of the design of Lessee that is attached to this Lease as Exhibit A-1 for the development of a public park on the Premises. The parties acknowledge that their intension is to segregate the portion of the Premises that is shown in Exhibit A-2 from the Premises and to . transfer title to the segregated parcel to the Municipality of San Juan in exchange for the Municipality of San Juan transferring to Lessor legal title to the property of the Municipality of San Juan that is also shown in ·Exhibit A-1. The property that is transferred by the Municipality to Lessor as part of such exchange shall be grouped by Lessor to the Premises and shall form part of the Premises that are subject to this Lease. Lessor hereby authorizes Lessee to negotiate such transaction with the Municipality of San Juan on behalf of Lessor and to obtain all necessary segregation permits with respect to the portion of the Premises to be segregated and the expansion of the Antonsanti Street. No adjustment to the Base Rent shall result from such transaction. lf the transactions with the Municipality of San Juan that are described in this Paragraph 3 B. 12 are not completed prior to the expiration of the Evaluation Period, Lessee may, at Lessee's sole option, either (i) terminate this Lease upon thirty (30) days' notice to Lessor, and this Lease will so terminate or (ii) modify Exhibit A-1 hereto in order the develop the park and the lmprovements within the portion of the Premises that is owned by Lessor (excluding the parcel that is owned by the municipality of San Juan). All reasonable costs and expenses related to the matters set forth in this subparagraph 12 shall be paid by Lessee, except that the transfer of the parcels to be exchanged between the Municipality of San Juan and the Lessor shall be gratuitous."

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b. Section 4 A. of the Ground Lease is hereby amended as of the Effective

Date to read in its entirety as follows:

"Base Rent. Within twenty (20) days of the Commencement Date, Lessee shall pay to Lessor the sum of TWO MILLION DOLLARS ($2,000,000.00) as full prepayment of the base annual rent under the Ground Lease for the first fifteen (15) years of the Term of the Ground Lease. During the extension periods of the Term of this Lease, to the extent that such extension options have been exercised by Lessee as provided in this Lease, Lessee shall pay to Lessor during the applicable Term, as basic annual rent ("Base Rent"), the following sums:

basic annual rent ("Base Rent"), the following sums:   Annual Base Rent Under Lease Year Rent
 

Annual Base Rent Under Lease

Year

Rent

Period

 

$382,454

1st Extension

16

17

393,928

 

18

405,746

 

19

$450,000

2nd Extension

20

463,500

 

21

.

477,405

 

22

491,727

 

23

506,479

 

24

521,673

 

25

$537,324

3rd Extension

26

553,443

 

27

570,047

 

28

587,138

 

29

604,762

 

30

622,905

 

c. Section 4. B. of the Ground Lease is hereby deleted in its entirety as of the

Effective Date and the reference in the Ground Lease to that Section shall read as follows:

"[INTENTIONALLY DELETED]"

d. Section 4. C. of the Ground Lease is hereby amended in its entirety as of

the Effective Date to read as follows:

"C. Rent Commencement Date. Base Rent and ali other charges due under this Lease shall accrue from the Commencement Date and shall initially be due and payable by Lessee in one (1) installment commencing on the twentieth (20th) <lay after the Commencement Date with respect to the first fifteen (15) years of

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the Term of this Lease and thereafter, commencing on the first <lay of the first extension option of the Term, shall be payable monthly in advance in the amounts set forth in Section 4 A. above ("Date of Periodic Rent Commencement"). Commencing on the Date of Periodic Rent Commencement, Base Rent shall be paid in twelve (12) equal monthly installments as provided in Paragraph 4. E.

below. Ifthe Date of Periodic Rent Commencement shall be on any

<lay other than the first <lay of a calendar month, then the Base Rent

and other charges for such month shall be pro-rated on a per diem basis. The foregoing notwithstanding, Lessee's obligation to provide insurance pursuant to Section 8 and to pay Additional Rent hereunder shall begin on the Commencement Date ofthe Term."

e. Section 4. E. ofthe Ground Lease is hereby amended in its entirety as ofthe Effective Date to read as follows:

in its entirety as ofthe Effective Date to read as follows: "E. Reri.t Payments. All payments

"E. Reri.t Payments. All payments of Base Rent, Additional Rent and oth~r payments required to be made to Lessor shall be in la"Yfill money of the United States of America without demand, offset or deduction, and shall be paid as provided in this Lease to Lessor at - the_ address indicated in Paragraph 29 or at such other place as Lessor may designate to the Lessee by notice in writing from time to _time and may be made by check or draft payable to the order of such payee,_ which check or draft must be paid in fu.U when presented. After the Date of Periodic Rent Commencement, all payments of Base Rent shall be made without notice in equal monthly installments in advance within the first five days of each and every calendar month."

f. Section 4. H. of the Ground Lease is hereby deleted in its entirety as of the

Effective Date.

g. Section 5. A. of the Ground Lease is hereby amended in its entirety as of

the Effective Date to read as follows:

"A. Lessee shall use the Premises to construct and operate on

any part thereon a community park for the general use of the public to be designed and constructed in harmony with the current design and landscape of the MAPR, as determined by Lessee's architect. Lessee, or an Affiliate of Lessee, shall make available to the Santurce community an hourly parking parking facility with capacity for parking of at least two hundred (200) vehicles on a separate property known as Stop 22, adjacent to the Premises. The parties hereto hereby agree that said park shall be known initially as "Parque La Cuidadela". Lessee shall have the right to change the

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name ofthe park during the Tenn of the Lease in its sole discretion. The right granted to the Lessee under this Section 5. A. includes the right of the Lessee to use of the Premises for fairs, concerts and other activities open to the public to be held within the Premises. As part of these activities the Lessee shall have the right to sublease space within the Premises to vendors and other merchants so that they can sell their products and merchandize within the Premises, including food trucks and other food and merchandise vendors."

h. Section 5. B. ofthe Ground Lease is hereby deleted in its entirety as ofthe

Effective Date and the reference in the Ground Lease to that Section shall read as follows:

[INTENTIONALLY DELETED]

i. Section 17. A~_ (1) of the Ground Lease is hereby amended by adding the following language at the end ofthis Section.

~'Notwithstanding the foregoing, Lessee may assign ºI' otherwise transfer this Lease at any time to Santurce Park Conservancy, Inc., a non-profit corporation organized for the purpose of operating and maintain the Santurce Park, without requiring the prior written consent of the Lessor. Any such assignment to Santurce Park Conservailcy, Inc. shall be notified in writing to Lessor by

to Lessor an executed copy of such assignment, to the

extent required in recordable form, under which Santurce Park Conservancy, Inc., shall have assumed this Lease and agreed to perform and be bound by the covenants and conditions of this Lease required to be performed and observed by Lessee after the date of

such assignment. Upon such assignment to Santurce Park Conserirancy, Inc., Lessee shall be relieved from all of its obligations under this Lease."

delivering

j. Section 37. B. of the Ground Lease is hereby amended

ofthe Effective Date toread as follows:

in its entirety

as

"B. This Lease shall become effective only when the Lessee

has delivered to the Lessor the insurance policies required from the

Lessee under this Lease and Lessor is not obligated under this Agreement until this Lease has been signed by the Executive Director or any other authorized officer to whom such authority was delegated by the Board of Directors of the Lessor and a copy of this Lease and the Amendment thereof executed on August , 2017 has been filed by the Lessor in the Puerto Rico Comptroller's Office in compliance with the requirements of Law No. 18 of 1975, as amended."

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k. Exhibit A-1 to the Ground Lease is hereby replaced in its entirety as of the

Effective Date with the new Exhibit A-1 that is attached to this Amendment.

2. Ratification. Except as expressly set forth in this Amendment, the terms and

conditions of the Ground Lease shall continue in full force and effect without any change or modification, are hereby ratified and confirmed in all respects, and shall apply for the balance of

the Term. In the event of a conflict between the terms of the Ground Lease and the terms of this Amendment, the terms of this Amendment shall govem. On and after the Effective Date, each reference in the Ground Lease to "this Agreement," "hereunder," "hereof' or words of like import referring to the Ground Lease shall mean and be a reference to the Ground Lease as amended hereby.

3. Modifications. This Amendment shall not be altered, amended, changed,

waived, t~rminated, or otherwise modified in any respect or particular, and no consent or approval required pursuant to this Amendment shall be effective, unless the same shall be in · writing and signed by or on behalf of the party to be charged.

4. Binding Effect.

This Amendinent shall be binding upon and shall inure to the

benefit ofthe parties hereto and to their respective successors, and permitted assigns.

and to their respective successors, and permitted assigns. r Entire Agreement. Ali prior statements, understandings,

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Entire Agreement. Ali prior statements, understandings, representations, and agreements between the parties, oral .or written, with respect to the subject matter hereof are

superseded

agreement between them in connection with this transaction and which is entered into after full investigation, neither party relying upon any statement, understanding, representation, or

byand merged in this Amendment, which alone fully and completely expresses the

agreement made by the other not embodied in this Amendment.

Amendment

accordance with the laws of the Govemment of Puerto Rico, without reference to its conflicts of

law provisions.

6. Governing

Law.

This

shall

be

interpreted

and

enforced

in

7. Counterparts.

This

Amendment

may

be

executed

in

any

number

of

counterparts. It is not necessary that all parties sign all or any one of the counterparts, but each

party must sign at least one counterpart for this Amendment to be effective.

8. Representations. Lessee and Lessor, and each of the persons executing this

Amendment on behalf of Lessee and Lessor, do hereby warrant that the party for which they are executing this Amendment (i) is a duly authorized and existing entity, (ii) is qualified to do business in the Commonwealth of Puerto Rico, and (iii) has full right and authority to enter into this Amendment, and that any person signing on behalf of such party is duly authorized to do so. Upon either party's request, the other party shall provide evidence reasonably satisfactory to the requesting party confirming the foregoing warranties.

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9.

Effectiveness. This Amendment shall not be binding upon either party unless and

until it is fully executed and delivered to both parties, whereupon it shall be effective as of the Effective Date.

IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment as of the Effective Date.

LESSOR:

PUERTO RICO HOUSING FINANCE AUTHORITY

By:~--+---+-~~~~~~~­ Name:
By:~--+---+-~~~~~~~­
Name:

-;re (Le M v Gfl. r ~ r- 1 "'T"\.\J

Title:

C

Fo

TAX I.D.

NUMBER:

475274v56

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A N T O N S A N T I s t . , S

ANTONSANTI st., SANTURCE

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PROPOSEDIMPROVEMENT ALTERNATIVE2 GENERAL PLAN~'"~

N S A N T I s t . , S A N T U R