Here are some factors that will help you analyze commercial real estate.
Depending on the nature and location of the property, investor’s plans
for the property, and the governmental climate, investor may want to
seek answers to the following questions, as well as others driven by
local issues and concerns. If the transaction contemplates any
development or redevelopment at all, the matters listed here are often
potential "showstoppers."
· Approvals. Requirements to obtain governmental approvals, or at least
make filings, under a wide range of laws. Development approvals are
only the tip of the iceberg. A transaction may require approvals under
laws governing such matters as antitrust, health care, housing, liquor
licensing, or operating matters generally. These requirements are
particularly likely for multisite quasi-operating-company transactions.
They will vary widely depending on the existing and intended use of the
property, as well as the size of the transaction and of the parties.
· Landmarks. Landmarks status of the property, and other similar
restrictions on development or redevelopment, such as historic
preservation issues and recorded development restrictions (also part of
the title review process).
· Licensing. Requirements for licenses and permits, and resolution of
any missing items. Any changes in such requirements that might result
from the transaction. Are the licenses transferable? Operating
licenses, such as those for liquor, health care facilities, gaming, and
the like, may raise issues that go beyond the property to be acquired.
Because they often involve some degree of governmental discretion,
transfers of these licenses introduce an element of randomness,
unpredictability, and hence risk that the contract must allocate
between the parties.
· Miscellaneous Agreements. Any agreements with governmental
authorities, whether or not recorded.
· Plaza Agreements. Public plaza agreements, particularly for issues
relating to income, maintenance, operations, and repairs.
· Public Areas. To the extent that seller owns any areas that are open
to the public generally, any measures that seller has taken to prevent
the public from obtaining a "prescriptive easement" or other impairment
of seller's title.
· Transportation. Agreements and arrangements relating to
transportation, either benefiting the property or restricting its use.
These might involve, for example, subway tracks and stations, rail
spurs, pipelines, and tunnels.
· Zoning. Zoning analysis, including compliance, appeal rights, and
availability of unused development rights, possibly culminating in a
zoning opinion or advice memo. Necessity for any variance, special
permit, or other dispensation. Any restrictions on the transferability
of these benefits.
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