Roynat Inc. - Team Approach Sells Industrial Property in Waterloo
In 1990, Roynat Inc. was the holder of the property mortgage for a company who defaulted and went bankrupt, leaving Roynat with ownership of a 1.3-hectare industrial property in Waterloo, Ontario. Roynat was unable to sell the property, but was able to secure a long-term tenant for the property. This tenant intended to purchase the property in 1998 and commissioned a Phase I Environmental Site Assessment (ESA). This ESA identified a number of potential environmental issues, which Roynat was requested to investigate. XCG Consultants Ltd. (XCG) designed and carried out a Phase II ESA, which identified the presence of chlorinated solvents impacts in the shallow groundwater below the site.
As part of XCG’s remedial action plan to meet Roynat’s goals, a groundwater containment and treatment system was designed and constructed to contain all impacted groundwater and treat the groundwater impacts before discharge to the local storm sewer. This system was constructed with an air-stripper to treat the chlorinated solvents (1,1,1-trichloroethane and 1,1-dichloroethene) impacts and with a photocatalytic oxidation (UV light) system to treat the related solvent stabilizer (1,4-dioxane) impacts. This system was proven to operate at nearly 100 percent efficiency and was constructed as a chattel for a future property sale. In addition to the establishment of a groundwater containment and treatment system, XCG completed a site-specific risk assessment (SSRA) for the property showing an acceptable risk of possible exposure for site users.
Having an operational groundwater containment and treatment system and having resolved the risk management issues through an SSRA, Roynat found a purchaser in 2004. The property sold for more than twice the price that was previously offered in 2000 for the property “as-is.” In addition, Roynat fully recovered the capital costs incurred in constructing the remedial system. In order to ensure that the property transaction would close, Roynat agreed to retain any future responsibilities for any low risk off-site liabilities, as well as providing a ten-year mortgage for 75 percent of the purchase price. This financing plan was key to closing the deal, as all potential purchasers had indicated that conventional financing methods to support this purchase were not available.
In the end, fair value for this previously under-utilized asset was recovered due to the combination of XCG’s environmental risk management expertise and Roynat’s innovative methods for financing.