PATRIMONIO MERCHANT TRUST & CO.

Indicative Term Sheet

Legacy Miami Mezzanine Facility

Date:October 2025

Project Overview

Project: Legacy Hotel & Residences – Miami Worldcenter
Borrower / Sponsor: Legacy Tower Borrower LLC (an affiliate of Royal Palm Companies)
Location: Miami, Florida
Facility Type: Subordinate Mezzanine / Preferred Equity Hybrid
Facility Amount: US$40,000,000
Purpose: Bridge capital to restart vertical construction, restore reserves, and complete sleeve remediation and soft-cost overruns.

Key Economic Terms

Interest Rate:: 1-Month Term SOFR + 10.00% (approximately 15.3% all-in; floor 4.25%)
Interest Payment:: Quarterly interest-only; option to PIK if project cash flow constrained.
Equity Participation:: 10% warrant on Sponsor's residual equity, exercisable upon full repayment of mezzanine facility and senior debt.
Tenor / Term:: 36 months, co-terminous with Sculptor Real Estate's senior loan maturity.
Target Return:: 26–28% IRR; approximately 2.0× MOIC under base-case sell-out scenario.

Capital Structure & Ranking

Sculptor Senior Loan:$160,000,000

(first-lien construction loan)

C-PACE Financing:$237,700,000

(contractually junior to Sculptor)

Mezzanine Facility:$40,000,000

(subordinate to Sculptor, senior to Sponsor equity)

Sponsor Equity:$130,000,000

(first-loss capital)

Total Project Capitalization:~$630,000,000

Collateral & Security

Collateral

•Pledge of Sponsor's membership interests in the Borrower entity
•Subordinate assignment of proceeds accounts
•Intercreditor agreement and recognition with Sculptor Real Estate

Guarantees

•Completion and carry guarantees from Dan Kodsi and Royal Palm affiliates (joint and several).

Covenants

•No new senior indebtedness without Mezzanine Lender consent
•Standard development reporting
•Mandatory excess-cash sweep following Sculptor repayment

Exit & Repayment Waterfall (Illustrative)

Based on full $850M sell-out scenario – showing who gets paid, in what order, and how much.

Priority	Recipient / Layer	Type	Approx. Amount (USD MM)	Source of Funds	Status at Exit	Notes
1	Sculptor Real Estate	Senior Construction Loan	$160M principal + $64M interest/fees	Condo sales proceeds	Fully repaid	First-lien, earns ~14–15% all-in; 1.40× repayment multiple required.
2	C-PACE Financing	Subordinate Assessment	$237.7M	Condo sales proceeds (after Sculptor payoff)	Fully repaid	Contractually junior via intercreditor; repaid from continuing closings.
3	Mezzanine / Gap Capital	Sub-Debt / Pref Equity	$40M principal + $18.4M interest + $22M equity warrant	Remaining condo closings & refinance	Fully repaid	Earns SOFR + 10% (~15%) + 10% of sponsor equity; ~26–28% IRR.
4	Sponsor / Developer Equity (RPC)	Common Equity	≈ $220–260M residual	Remaining sales after debt repayment	Retained / distributed	Net profit after all debt layers retired; represents sponsor's upside.
5	Commercial Condo Assets (retained)	Hard Asset	≈ $150M value	Retained by sponsor	Owned free & clear	Includes Adventist office (77K SF), ballroom, F&B, amenities & parking.

Summary by Phase

Phase	Description	Total Distributed (USD MM)	Cumulative % of Sell-Out (≈ $850M)
Debt Repayment (Sculptor + C-PACE + Mezz)	Senior + subordinate lenders repaid	≈ $480–520M	~60%
Equity Recovery (RPC + retained assets)	Sponsor distributions & commercial value	≈ $370M	~40%

Visual Hierarchy (Order of Payment)

1Sculptor Senior Loan (first out)

2C-PACE Assessments

3Mezzanine / Gap Facility

4Sponsor Equity Residual

5Retained Commercial Condos (ballroom, F&B, office, parking)

Projected Mezzanine Investor Returns

Cash Interest:~$18.4 million (3 years at 15.3%)

Equity Warrant Value:~$22.0 million (10% of $220M residual)

Total Return:

~$40.4 million

2.0× MOIC | 26–28% IRR (3-year hold)

Governing Terms

Governing Law:: State of Florida (Miami-Dade County)
Legal Counsel:: To be designated by Mezzanine Lender
Closing Conditions:: •Sculptor Real Estate consent
•Execution of intercreditor agreement
•Updated GMP budget and remediation plan certification

Summary

This structure provides mid-teens current yield with a 10% equity kicker, aligning interests between the Mezzanine Lender and Sponsor while preserving Sculptor's first-lien senior position.

Expected total return for the mezzanine tranche: 26–28% IRR, with full security, cross-collateral linkage, and ~3× coverage from subordinate capital beneath the Sculptor facility.

Non-Binding Provision

This term sheet is for discussion purposes only and does not constitute a commitment to lend or invest. All terms are subject to final credit approval and documentation.

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