Industrial property disaggregations: Planning the new ownership regime

Abstract

Companies may wish to sell one or more, but less than all, the lines of business being conducted at a significant industrial or manufacturing facility with a long operating history. The goal of creating separate ownership and operation for the two distinct operations in the future may be physically difficult or prohibitively expensive where the facility has been designed, constructed and maintained over many years as a single integrated whole. The lines of business may also rely upon one another for shared utilities, services, or even production resources where raw materials or processed components from one operation are necessary or cost-advantaged to the other. Executive management, corporate real estate executives, and outside lawyers and other professionals have much to consider in these scenarios, from the identification and assessment of the assets and operations to the menu of choices, including investment in physical separation, future shared or separate neighbouring ownership regimes, and a virtually endless set of variable terms for future rights and responsibilities, financial obligations, the allocation and management of risks, and the contemplation of eventual changes or even exits from the arrangement. This paper provides an overview of some of the starting points and considerations in embarking on such a project.