CDCCO - FAQs

Q: Can Owners limit the liability and risks of owning environmentally impacted properties?
A: There are several ways in which property owners can effectively limit their environmental liabilities and risks. The most common of which is to sell challenged properties to qualified Buyers capable of offering indemnification and assuming future environmental liabilities. Indemnifications and assumption of liabilities can be structured in many forms including:
· The purchase of environmental insurance.
· A cash escrow equivalent to the cost of cure, or a percentage thereof.
· Holding title in escrow until the selected Buyer is able to clean and bring closure to the site through (NFA) letters issued by the appropriate State agency.

Each method of indemnification comes with a cost that is generally reflected via a reduction in sell price. However, such reductions have proven to be economically advantageous to landowners when compared to the long-term costs to hold.
Commercial Development Company has successfully acquired environmentally challenged real estate from many of the worlds largest and most risk-adverse corporate land owners.

Q: What are the costs associated with holding an underutilized property?
A: The answer can vary significantly from one holding to another. However, certain costs are often incurred and should be analyzed utilizing the present value of money based upon an annuity and spread over the anticipated number of years that a property will be held. Click on the "Cost To Retain" icon below to visit an excel worksheet designed to identify and calculate many of the common costs of retention.
Unfortunately, it is not uncommon for a landowner to incur holding costs over a period of time that in and of themselves far exceed the value of the property. Consequently, the best course of action is often a quick disposal at a discounted value.

Q: How important is the Buyer's past record of performance?
A: It is said that to understand the future look first to the past. This maxim most definitely applies to the successful disposition of environmentally challenged real estate. Sellers should scrutinize prospective Buyers by looking closely at the following factors:

· Comprehension of environmental law.
· Comprehension of real estate law.
· Past record of obtaining environmental site closures via State and Federal regulators.
· Comprehension of environmental insurance.
· Demonstrable experience.

There is no viable substitute for a demonstrable and successful track record. Commercial Development Company encourages close scrutiny of its superlative performance over the past 15 years.

Q: Do sale lease back agreements really make sense?
A: There are several ways in which property owners can effectively limit their environmental liabilities and risks. The most common of which is to sell challenged properties to qualified Buyers capable of offering indemnification and assuming future environmental liabilities. Indemnifications and assumption of liabilities can be structured in many forms including:

· The purchase of environmental insurance.
· A cash escrow equivalent to the cost of cure, or a percentage thereof.
· Holding title in escrow until the selected Buyer is able to clean and bring closure to the site through (NFA) letters issued by the appropriate State agency.

Each method of indemnification comes with a cost that is generally reflected via a reduction in sell price. However, such reductions have proven to be economically advantageous to landowners when compared to the long-term costs to hold.
Commercial Development Company has successfully acquired environmentally challenged real estate from many of the worlds largest and most risk-adverse corporate land owners.

Q: Should Companies sell real estate assets individually - or in portfolios?
A: This answer varies from case to case. However, many corporations have found it advantageous to group undesirable properties with the desirable in a portfolio format. Thus, ensuring a quick sell of not only the strong properties but the weak as well. In addition to quicker dispensation, corporate land owners often realize greater yields from properties grouped together opposed to individual liquidation.
Most all buyers of industrial properties utilize a unique model when deciding whether or not to purchase. Portfolios allow buyers to average risk/reward ratios amongst multiple properties and often facilitates the acquisition of properties that would otherwise have been passed over.

Q: Should Sellers conduct Phase I and Phase II environmental studies?
A: Sellers generally benefit from conducting their own Phase I and Phase II environmental studies prior to selling a property. By doing so the seller establishes a baseline environmental picture that will prevent future users of the site from claiming their own, "new" environmental issues were created by the original seller.
In addition, established environmental information greatly facilitates the speed at which a buyer can purchase the property. Obviously, a buyer looking at two or more potential acquisition sites of equal value will focus first on the site with known environmental information opposed to a site with insufficient data.
In short, it is essential for seller's of environmentally challenged real estate to engage a first rate environmental engineering firm to adequately assess a site prior to putting it onto the market.