environmental pitfalls guillermo accame director of risk management, panattoni development company,...
TRANSCRIPT
Environmental PitfallsGuillermo Accame
Director of Risk Management, Panattoni Development Company, Inc.
Richard SheldonEnvironmental Practice Leader, Willis
Values plummeted 20-40%
Projects were leveraged 90%+
Loans upside down
Banks called in equity
Major bankruptcies declared
The 2008 Crash was Epic
Too big to fail…
Some retraction by “veteran markets”
Shifting of U/W talent pool
More open dialogue about claims development
New markets and capital enter at the fastest pace ever
The 2008 Crash was Epic?
THE DARK AGES 2009 - 2010
Valuations upside down
Manage debt or fail
Reduce overhead
Raise capital
2009 - 2010 The Dark Ages
New market entrants attempt to differentiate
Next wave of pricing wars
Lack of depth in experienced decision-makers
Claims development and reserve strengthening
2009 - 2010 The Not So Bright Ages
Value add acquisitions and BTS
No spec development
Hard to get debt
Institutional equity only
2011 – 2012 Conservative Deals
Coverage enhancements dependent on risk
Term and class limitations
Still competitive environment for some classes
Cost cap is dead, or is it?
2011 – 2012 (Sort of) Conservative Deals
Spec development
55-65% Construction debt
Institutional and private equity
Shorter due diligence times
2013 – 2014 Are the Go Go Days Back?
2013 – 2014 Are the Go Go Days Back?Insurer appetites better defined
Continued refinement of product offerings
M&A/Transactional business on the increase
Claims still developing, but also getting paid
WHAT HAPPENED TO ENVIRONMENTAL?
Investors and Lenders
Became Extremely Sensitive to Risk
Due Diligence
More Phase II investigations Detailed quantification of risk Time a major risk factor Vapor encroachment
HOW DO WE PROTECT OURSELVES?
Three Legs of the Stool
Business Practices Contracts Insurance
What does Remediation Cost?
Soil Generally $100/cubic yard Usually under $1M Months
Groundwater Usually over $1M Years
90% of remediation costs <$2M
Uncovering Buried Surprises
Separators and Sumps
Oily Pipes
Solid Waste Landfill
Polychlorinated Biphenyl’s in Concrete…
Superfund Site Next Door
Phantom Groundwater Plume
Offsite Vapor Encroachment Conditions
Naturally Occurring Asbestos in Soil
No matter how hard you try…
“It’s not easy being green”