The operation of commercial real estate assets can have a significant effect on the environment – particularly with respect to resource consumption and waste generation – and on the health of building occupants. STORE Capital Corporation (“STORE”) believes that being conscious of, and seeking to address, these environmental impacts – both before acquiring a property and after becoming the owner – can play an important part in building and sustaining successful businesses.
Assessing Properties. STORE’s commitment to environmental sustainability begins before it acquires a real estate asset. STORE’s standard, pre-acquisition property due diligence procedures include the following:
- Engaging a STORE-approved, nationally recognized and insured independent environmental engineering firm that is qualified to perform environmental site assessments in accordance with the most current standards published by the American Society for Testing and Materials.
- Requiring, as a condition precedent to the acquisition, the delivery of a Phase I environmental assessment (a “Phase I”) identifying any recognized environmental conditions (“RECs”) affecting the property. As part of the Phase I, the independent firm will:
- Visually inspect the property from the boundaries and selected interior portions of the property, focusing on general property operations, the existence of above-ground or visible underground chemical or waste storage, evidence of releases of hazardous substances, the existence of asbestos-containing materials and/or the possibility of vapor intrusion.
- Analyze the physical setting of the property based on a review of US Geological Survey topographical maps, Federal Emergency Management Agency flood maps, US Department of Agriculture soil surveys and selected geological reference information.
- Review historical information regarding the property – including aerial photographs, city directories, fire (Sanborn) insurance maps, prior reports (if any exist), property tax assessor files, property land title records and zoning records – to identify and document past uses of the property and adjoining properties.
- Review regulatory records, including federal and state databases, for indications of RECs or other conditions or liabilities affecting the property.
- Conduct interviews with personnel of the seller who have knowledge of the uses and physical characteristics of the property.
Addressing Environmental Conditions. Where STORE has identified RECs associated with a property but still determines to proceed with the acquisition, STORE will act to address these and other conditions. These actions may include:
- Conducting additional environmental testing in the form of a Phase II environmental assessment.
- Submitting the property into a voluntary compliance or clean-up program of the State where the property is located.
- Purchasing an environmental insurance policy to insure against future contamination-related claims of the State or a third-party claimant and/or obtaining or increasing coverage for flood, hurricane and other similar risks.
- Requiring the seller to remediate the REC in accordance with any State-mandated minimum requirements.
Acquiring Properties. If STORE is satisfied with the results and outcome of its pre-acquisition due diligence process, then it will execute a lease with the seller. Pursuant to these agreements, the seller will make various representations and warranties regarding the property and agree to certain covenants and indemnities related to its continued use of the property.