HURRICANE IRMA
Repurposing commercial projects in Florida
while maximizing net operating income
By Kim Ashby
Special to Florida
Construction News
As the Florida economy gains trac-
tion, building owners and developers
are rightfully examining all of the op-
tions that may be presented for maxi-
mizing the income from commercial
properties, and especially from exist-
ing bricks and mortar in already ma-
ture areas.
In Florida and surrounding areas
the challenges of dealing with the af-
termath of Hurricane Irma may have
inadvertently delivered a boost to the
incentives for repurposing for the
properties which were affected by the
storm. This article will explore those
types of repurposing that have had
particular successes as compared
with those which continue to struggle
and offer suggestions about how to
tell one from the other at the outset of
the plan for repurposing.
14 – FALL 2017 — Florida Construction News
Investment in the project begins
with the projection of the ultimate out-
come of the repurposed commercial
property, and it is most likely to origi-
nate if it can predictably throw off a
sustained acceptable net income for
at least 10 to 12 years. With the lim-
ited exception of cash buyer owners,
the attractiveness of the repurpose
scheme to commercial lenders is typ-
ically the starting point. Since the
cheapest money to borrow has histor-
ically been for loans of at least 10
years, the repurposed use must
demonstrably show that the net oper-
ating income will support the debt
payments and achieve a loan to value
ratio of usually 70 percent or less over
the life of the loan, plus years follow-
ing to allow for refinancing.
In addition to the search for con-
ventional financing, federal and state
recovery funds are now a separate op-
tion to finance remediation and devel-
opment of a new use for properties
and structures which were damages
in the hurricane force winds that af-
fected so much of the state.
FEMA and related agencies have
access to more than $15 billion in
federal funding to assist in rebuilding
damaged structures. See https://
www.disasterassistance.gov. Also,
the Small Business Administration has
posted availability commercial ven-
tures that qualify for SBA financing to
access specially earmarked funds to
repurpose structures damages by the
recent storm. See https://www.sba.
gov/loans-grants/see-what-sba-of- fers/sba-loan-programs/disaster-loans.
The type of repurposed use does,
and should, depend greatly not only
on the region but the anticipated
growth and development in that re-
gion. Though this may state the obvi-
ous, research in advance will often
better align the repurpose plans with
something not yet developed but on
someone else’s drawing board.