Industrial Portfolio Transaction Overview

Date of Transaction	December 1997
Transaction Size	$2.3 Million
Remediation, Insurance and Redevelopment	$5.6 Million
Type of Asset	Commercial and Industrial Portfolio
Properties - Gross Rentable Area	391,678 square feet
Properties - Total-acreage	614-acres
Loans	16 mortgage loans with $5.2 million of face value
Location	US Region	Southwest Northeast Midwest West

Transaction Background

An acquisition of a portfolio of real estate assets and loans from Borden, Inc. for approximately $2.3 million, plus the assumption of environmental liability. The real estate portfolio included 21 properties consisting of 391,678 square feet of buildings, 614-acres of land and 16 mortgage loans totaling $5.2 million of face value.

Environmental

Twelve of the real estate properties and collateral for three of the mortgage loans had some degree of environmental contamination, including PCB's, pesticides, chlorinated solvents and metals. Four of the real estate properties accounted for approximately 90% of the total estimated remediation costs. Concurrently with the closing of the transaction, our client purchased remediation stop loss and property transfer liability environmental insurance. The remediation stop loss insurance was structured to cap to remediation costs at $5 million.

Transaction Highlights

• A large percentage of the loan portfolio was uncontaminated and, therefore, could be sold relatively quickly in order to fund the remediation costs associated with the contaminated assets.
  
  
• This transaction was a landmark transaction because it highlighted the ability to acquire contaminated assets from a large corporation, structuring the necessary insurance and related indemnification to satisfy the cooperate owner that ongoing liability had been transferred to a third party.