We advised an investor – a commercial real estate capital provider and wholly owned subsidiary of a leading property and casualty insurance company, in a joint venture with its prominent development partner – on the contracting strategy for a 1.2 million sq/ft Class-A industrial cross-dock facility, which they successfully developed for a build-to-suit tenant, including drafting and negotiation of the $81 million cost-plus guaranteed maximum price (GMP) construction contract. We helped it navigate the need to begin site work and procure of critical long-lead-time items under a letter of intent and indemnity agreement, so financing-related delay did not impact the tenant’s development timeline, causing substantial GMP costs to be incurred by the general contractor and reimbursed by the joint venture before the GMP agreement was signed. We counseled it regarding the project delivery method, form of construction contract, legal issues related to scope, cost, schedule, insurance and indemnity, coordination with architectural and engineering agreements, and alignment of commercial incentives with the general contractor, including potential sharing of savings under the GMP. The joint venture successfully completed the project, which is fully leased and occupied, a win for our investor client.
