Question Timestamps
- 22:30: Who mandates the Phase One report? Is that SBA? Is that the lender?
- 23:10: And how are these things, these reports, priced? I mean, I assume it’s based on size of the real estate. And so what are ballpark costs? Couple of questions asking.
- 24:21: And is there some sort of ongoing requirement for environmental testing, blanket? I’m sure there are in certain industries, but kind of as a blanket thing?
- 22:58: There’s a question here: are environmental reports something that is required annually? If yes, could the seller’s past reports satisfy the lender requirement? That was kind of—I reworded that to ask you guys. My point in repeating all of this is it sounds like, from your tone, that this is not something that you want to shortcut. This is not something where you want to try to save money. I mean, be prudent, but save money—you want to do a proper Phase One and not skimp on this part of your diligence.
- 27:07: Are there, other than environmental diligence, other sort of real estate-related diligence that are a good best practice—structural stuff, code compliance, stuff?
- 43:35: With real estate, can you burn off the PG? So the question is, can you discuss PG burn-off? In other words, I have a PG with the landlord at the outset, but I want to get out of it at some point in time. How do lessors usually go about this?
- 45:53: So, but don’t landlords generally want just continuity of rent checks? Obviously, if the rent is below market, they want to reset that to market as quickly as possible. But that case aside, aren’t they happy to just, you know, have an eager tenant say, hey, please leave everything the way it is, I’ll pay you.
- 47:08: Let’s say a buyer is acquiring a business via 7(a), SBA 7(a), and the business owner leases the building. Is the building owner—doesn’t want to enter into a new lease?
- 48:26: Can you start a conversation with a third-party landlord? Have a lease signed early that has a closing contingency, so I guess it only comes into effect if the deal closes?
- 50:10: And forgive me if I missed it, but we’ve got two questions, so I don’t think I did this—if it’s a stock sale?
- 51:18: In SBA deals, the size of the deal, the size of the real estate often is not going to make it worthwhile, or there’s not going to be an appetite for it. But can you be more specific around kind of an EBITDA threshold, let’s say, where sale-leasebacks start to happen?
- 52:26: Can you guys comment on anything to keep in mind for retail real estate versus office versus light industrial leases, anything jumping?
- 55:02: So Trudy says I’ve dealt with Phase One, Phase Two, and monitoring wells—best to gather the info for the site and neighbors before LOI, in my opinion. The neighbor could be the toxic problem.
- 55:41: Final question, this is maybe in the weeds a little bit, but you had touched on it, Bill: what is the reasoning behind creating two entities for buying business and real estate? Why don’t they go under the same LLC? And you’ll hear private equity types talk about this as OpCo and PropCo, property company and operating company, right?
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