Our client, a publicly traded REIT, had two large Southeastern US shopping malls in its portfolio that standard flood zone determinations indicated to be within FEMA-designated Special Flood Hazard Areas (SFHA), which include flood zones beginning with letters A or V. This SFHA designation resulted in a total flood exclusion under the client’s master property insurance policy, forcing them to spend $175,000 on NFIP and excess flood insurance for these two properties.
We did a thorough flood risk analysis and found that both properties were not in a high risk of flooding during 100-year storms. Both properties had been wrongly included in the SFHA. We worked with FEMA to successfully remove both properties from the high-risk flood zone and to reclassify both properties into a low-risk flood zone, where they should have been in the first place. This successful flood zone correction and reclassification increased property values by $2,500,000 (based on the application of a 7{b73b969d192d8eafaea0090998e86317c7e4c69160e33071b50feed6bdb2d318} capitalization rate to the amount of annual savings) and eliminated $175,000 in premium costs.
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