Commercial Investment Real Estate March/April 2018 | Page 17

Major weather events can affect the financial performance of commercial properties. The purchaser should determine the financial viability of the asset and account for the residual impact of storm damage to the property. This financial analysis is of paramount importance to the purchaser’s lender while underwriting the loan and evaluating the collateral property. Likewise, the buyer should study the restoration obligations and related termination rights under the existing property leases. The cost and availability of insurance can vary depending on the nature and severity of recent casualty events. In addition to lender- imposed minimum insurance requirements, the buyer should con- sult with its insurance provider and consider increased coverage amounts to mitigate the risk of future weather-related losses. During due diligence, the buyer should determine the flood zone designation of the property. If the property is located within a designated special flood hazard area, the buyer might consider working with the seller to obtain a letter of map revision to re- classify the flood zone designation. staggered the commercial real estate market on the island and kept some potential buyers on the sideline. However, oppor- tunities abound. As a U.S. territory, Puerto Rico acquisitions are free of many of the tax and logistical hurdles that often hamper real estate investment internationally. Historically among the 50 busiest U.S. ports, the volume of goods flowing into the Port of San Juan, P.R., creates an ongoing need for warehouses, distribution centers, and retail locations. Devastation of the electrical grid, cellular towers, and roads and bridges will likely spawn opportunities for public-private partnerships and direct investment in core infrastructure. On the strength of recent legislation providing favorable tax treat- ment to certain financial entities, affiliates of investment banks and private equity funds continue to target distressed loans and foreclosed properties across Puerto Rico. Andrew Maguire, Esq., is a real estate partner at McCausland Keen + Buckman in the greater Philadelphia area. Contact him at [email protected]. Market Outlook Ongoing uncertainty over the restructuring of Puerto Rico’s debt, coupled with the catastrophic impact of Maria, has This article is for informational purposes only and not for the purpose of providing legal advice and is not be acted on as such. Did you know? The mission of the CCIM Foundation is to advance and foster commercial real estate education through scholarships, programs, and research initiatives. Since its inception, the CCIM Foundation has provided scholarships to students pursuing the CCIM designation. During the last 25 years, the CCIM Foundation has awarded thousands of scholarships to qualified individuals, funding more than $2 million. In addition, the Foundation has provided valuable research to, and has helped support programs benefiting, the entire commercial real estate industry. None of this work would be possible without your support. Thank you! To learn more about the CCIM Foundation and to donate to our mission, please visit our website at www.ccimef.org Thank you to our 2018 corporate sponsors The CCIM Foundation is a 501(c)(3) nonprofit organization. CCIM.COM March | April 2018 15