1. SURPLUS PROPERTY ROUNDTABLE MEETING
REAL ESTATE AND ENVIRONMENTAL SUBCOMMITTEE
NOVEMBER 2017
Chair/Moderator- Mike Goldstein- Ingersoll Rand
Co-Chair/Co- Moderator: Mike Malley
INSURANCE AND FINANCIAL ASSURANCE IN ENVIRONMENTAL LIABILITY TRANSFER TRANSACTIONS

2. Framing the Issue-November 2017 SPR Meeting
February 2017
May 2017
August 2017
Insurance and Financial Assurance
Environmental Due Diligence
Seller’s Buyer Due Diligence
Contract Terms
Development Restrictions
Emerging Issues
Seller full disclosure
Appropriate level of data
Is more better?
Seller Decision Process
Type and level of Buyer testing allowed
Certifications
Buyer right to investigate
Phase I
Phase II, more?
Reporting requirements of Seller and Buyer
Financial strength
Reputation
Buyer entity type (i.e., SPE, LLC, etc.)
Management team
Similar projects
Planned reuse
Health and safety
Insurance
PLL
RSL/Cap Cost
Excess of Indemnity
Financial Assurance
Bonding
Letter of Credit
Corporate guarantee
Trusts
Escrows/Holdbacks
Reps/Warranties/Indemnities/Covenants
Definition of baseline environmental conditions at close
Required regulatory endpoints
Environmental liability transfer mechanisms
Does it truly exist?
Zoning restrictions
Deed restrictions
Easements
Covenants (i.e., no groundwater use)
Engineering controls
Institutional controls
Run with the land
Vapor Intrusion
Emerging contaminants
Regulatory changes
Cleanup standards
Political climate
Cleanup technologies
Global economic market
November 2017

3. Risk & Liability Management
Each company has its own approach
Each deal has its own facts
Insurance products/financial assurance are tools
Risk tolerance drives structure!

4. Managing Risk for Successful Brownfield Transactions
Known Contamination
Unknown Contamination
Regulatory Reopeners
Design/Construction Failure
Non-owned Offsite Disposal
Business Interruption
Bodily Injury / Property Damage
Natural Resource Damage
Cost Certainty / Cost Containment

5. Insurance and Financial Assurance in ELT Transactions
1Amounts are for illustrative purposes only
Insurance and Financial Insurance Layers

6. Real Estate and Environmental Committee – 2017 Highlights/Takeaways
February 2017 Meeting – Due Diligence in ELT Transactions
Sharply divided opinions:
Should Sellers allow Buyers to conduct Phase II investigation?
Should Seller conduct its own Phase II in preparing for sale
Reporting obligations of the Seller when Buyer conducts a Phase II investigation
May 2017 Meeting – Seller Due Diligence of Prospective Buyers
Buyer Attributes (in order of importance):
Financial strength
Reputation/prior track record
Indemnifications, financial guarantees and survivability
Site reuse
Commitment to post-closing obligations
August 2017 Meeting – Contract T&Cs in an ELT Transaction
Does Liability Transfer Truly Exist?
Contractual assumption of liability possible, but statutorily, liability always stays with Seller
Establish iron clad and well defined T&Cs (indemnities, reps, warranties, covenants)
Seller’s PSA should be starting point
Buyer financial assurance is a key factor in successful ELT transactions (e.g., escrow)
“As is” sale price is a function of how much remediation still has to be performed
Survey: What topics does the SPR membership want us to explore in 2018?