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CareFirst of Maryland, Inc.
June 30, 2015
Page 6
Perform all items in Appendix A of the Report within the two columns labeled “Immediate Expense
Recommended ASAP”. Merritt will address all issues listed in the “Immediate Expense Recommended ASAP”
with the exception of the requested “Arch Flash Analysis”.
o
Merritt performs infrared scans of the electrical equipment every two years. The next scan is scheduled
for July of 2015. These items are repairs and maintenance items that will be part of the operating
expenses of the buildings.
Other items for repair or replacement were identified in the report. Please outline Landlord’s capital program
for upgrading and maintaining the building(s). Please confirm that such capital items shall be at Landlord’s
sole cost and expense, and shall not be passed through to CareFirst at any time during the Term. Please be
sure to address, at a minimum, the following particular items:
Repair and replacement of the roofs at both buildings (10800 has approximately 5+ years of useful life,
10802 is at or nearing the end of its useful life). CareFirst requests that the 10802 roof is replaced prior to
12/31/2018 and that the 10800 roof is replaced roughly 4-5 years thereafter. Please refer to Section 4.1 of
the Report. It is suggested that a BUR system be installed rather than the existing ballasted EPDM.
o
Merritt continually monitors all roofs for repair or replacement. Based upon Merritt Managements’ past
experience and expertise it is estimated that roof replacement will not be warranted until approximately
2037 for 10800 Red Run Boulevard and 2033 for 10802 Red Run Boulevard. Typical useful life of our roof
systems is 30 years. Merritt will not replace the current roof systems until such time as a replacement is
warranted. Such replacement will be capitalized and will not be part of CareFirst’s operating expenses.
General maintenance and repair of the roof systems shall be included in operating costs.
Replacement of the rooftop RTU’s. CareFirst requests that the 10802 RTU’s are replaced prior to
12/31/2018 and that the 10800 RTU’s are replaced roughly 4-5 years thereafter. Please refer to Section 6.1 of
the Report.
o
Merritt Management shall continue to monitor and repair the existing RTU’s as necessary. Based on
Merritt Managements’ past experience and expertise it is estimated that RTU replacement will not be
warranted until approximately 2027 for 10800 Red Run and approximately_2023 for 10802 Red Run
Boulevard. Typical useful life of our RTU systems is 20 years. Merritt will not replace the current RTU systems
until such time as a replacement is warranted. Such replacement will be capitalized and will not be part of
CareFirst’s operating expenses. General maintenance and repair of the HVAC systems is included in operating
costs.
Please also address any remaining items identified in the Report, but not mentioned above. Please be sure to
address items in the Report requiring repair or replacement within the first five (5) years (prior to 2020), and
items identified requiring repair or replacement within 6-10 years prior to 2025. CareFirst will review
Landlord’s capital program for the Lease Term in detail, and any and all items addressed in the Report or
otherwise required shall be addressed to CareFirst and Landlord’s mutual satisfaction.
Landlord Response: Please see attached 5 year budget outlining both general repair and maintenance items
as well as capital items to be performed in addition to our standard repair and maintenance of the
properties.
10.
Lease Renewal Options
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