Opinion ID: 4505127
Heading Depth: 3
Heading Rank: 3

Heading: Sale of the apartment complex

Text: {¶ 8} In a signed “Purchase and Sale Agreement” dated June 22, 2015, Palmer Square agreed to sell the subject real estate to PPG Manhattan Real Estate Partners, L.L.C., for $35,000,000. The price encompassed items of personal property, both tangible (e.g., clubhouse furnishings and recreational amenities) and intangible (e.g., the “Palmer House” name), all of which related to the business of renting apartments. Subsequently, through a formal amendment to the purchase agreement, the parties changed the sale price to $35,250,000. {¶ 9} Article 15 of the purchase agreement gave the purchaser the option to structure the sale as a “Drop Down LLC sale.” The first amended purchase agreement encompassed the purchaser’s decision to exercise that option. Under the option, the purchaser would give notice to the seller, then organize a limitedliability company (“L.L.C.”) in Delaware with the seller as the sole owner. 3 SUPREME COURT OF OHIO Thereafter, the seller would convey the property to the L.L.C. in accordance with a prescribed form of warranty deed. Next, the agreement provided: [I]n lieu of Seller selling to Purchaser, and Purchaser purchasing from Seller, the Property, as contemplated in this Agreement, (i) Seller shall sell, and Purchaser shall purchase, all of the membership interests of the Drop Down LLC from Seller at Closing (the “Drop Down LLC Sale”), and (ii) in addition, Seller shall execute and deliver at Closing to Purchaser an assignment of all the membership interests in the Drop Down LLC. (Boldface sic.) In an amendment to the purchase agreement, the parties acknowledged the purchaser’s preference to consummate the transaction pursuant to the “Drop Down L.L.C.” provision and the purchaser obtained an option to terminate the agreement if the lender would not approve the entity transfer in connection with the purchaser’s assumption of the loan obligation. {¶ 10} The school board also introduced a “Final Settlement Statement” on a real-estate title agency’s form, which was dated October 6, 2015, and signed by the parties. On that statement, the “transaction type” is specified as “purchase of membership interest in Palmer House Borrower, LLC”; the seller is Preferred Real Estate Investments, L.L.C., and the buyer is Palmer House Owner, L.L.C. The statement corroborates a sale price of $35,250,000 and establishes the closing date as October 6, 2015, the same day that the subject real estate was transferred to Palmer House Borrower and Palmer House Borrower assumed the existing mortgage on the property.