Corporate Transaction Overview

Date of Transaction	April 1999
Transaction Size	$38.8 Million
Remediation, Insurance and Redevelopment	$13.6 Million
Type of Asset	Ownership interest in two companies: a real estate holding company; and an operating company providing services to the real estate holding company.
Raw-acreage	148-acres + option to acquire 290-acres
Location	Bayonne, NJ Elizabeth, NJ Woodbridge, NJ

Transaction Background

An acquisition of an ownership interest in a real estate holding company which owns three assets. One asset is a 130-acre waterfront property in Bayonne, New Jersey, which was contaminated through its historic use as a landfill. Another asset is a property in Elizabeth, New Jersey, which consists of 18-acres adjacent to the Jersey Gardens Mall. The third asset is an option to acquire 230-acres in Woodbridge, New Jersey, owned by PSE&G fronting the Arthur Kill ship channel.

Environmental

There are various environmental issues at each property relating to former uses. Remediation efforts are in different stages of completion and are dependent upon the ultimate plan of use following such cleanup. The Bayonne asset was largely contaminated as a result of its former use as a landfill, so the remediation plan provides for containing prior contamination and then capping the site with approved fill material. Remediation costs for all three sites are estimated to be approximately $13.6 million, which will be funded through revenue generated from accepting fill material on the sites. Concurrently with the closing of the transaction, our client purchased remediation stop loss and property transfer liability environmental insurance.

Transaction Highlights

• All three assets are attractively located in the New York metropolitan area, within close proximity to Newark International Airport and the seaport activities of Northern New Jersey.
  
  
• Remediation costs will be largely self-funded through revenues generated by tipping fees received from the acceptance of dredge spoils and construction debris.
  
  
• These properties currently represent the only permitted upland sites in the New York metropolitan area for accepting dredge spoils.
  

Developments after Acquisition

• To date, fill material has been accepted at the Bayonne site adequate to fund all required remediation and development costs, plus the operating costs for the fill management company.
  
  
• A golf course design at the Bayonne site has been completed and reviewed by the New Jersey Department of Environmental Protection ("DEP").
  
  
• The Elizabeth site has received site plan and subdivision approvals for a 700,000 square feet office complex adjacent to Jersey Gardens Mall. A leasing firm is marketing the site to prospective tenants and has distributed a marketing package to potential developers and buyers.
  
  
• Our client is currently working with DEP to obtain approval for a waterfront development permit at the Elizabeth site.