In Cape Coral, Florida, a forward-thinking acquisition team recognized the climatic challenges in the region but also saw the upside to investing in one of United States’ fastest growing regions. When evaluating a retail property, they knew that physical climate risk would need to be a key factor in their due diligence process. The key question: Could climate risk derail the deal, or could it be managed?
Getting Precise, Actionable Insights
To tackle this challenge, the team entered the shopping center’s address into the ClimateFirst platform and confirmed elevated climate risks across a number of perils within seconds. The Climate Risk Exposure Screening report then provided a next level of resolution to understand what and how these risks may present at the site. Flood was identified as a significant risk and a detailed flood map, with a 30 x 30-metre resolution, revealed exactly where the property was most vulnerable.
Translating Risk into Real Financial Impact
Once flood emerged as a key concern, the team chose not to walk away but to dig deeper; examining whether this risk was enough to threaten the investment’s viability. To do this, they translated the flood exposure into financial terms using a Climate Value at Risk (CVaR) assessment from the ClimateFirst platform. The analysis mapped risk directly onto the building’s systems, offering transparency that enabled confident decision-making. The results were decisive: the property could face potential losses exceeding $6 million on a $36 million asset. This was not vague or abstract modeling, but clear financial data to guide their decisions. This included whether flood insurance could be obtained for the site. Assuming coverage would be costly, obtaining a quote became a critical input to confirm that the property could still deliver a positive ROI.
Turning Risk into Real-World Action
Taking a closer look at the CVaR report’s findings, the team confirmed that nearly $4.5 million of the $6 million was concentrated in the at grade finished spaces & electrical room—a critical detail for both insurance and future capital planning. With the ongoing intention of seeing if these risks could be managed to keep the deal viable, they moved quickly into ClimateFirst’s resiliency planning feature. It recommended targeted flood-protection measures, like installing a flood-protection device. With a vendor quote in hand, the team incorporated the costs directly into their acquisition financials.
Smarter, More Confident Acquisition Decisions
By integrating climate risk early, the team was able to:
- Align insurance coverage and costs with actual exposure.
- Incorporate climate resilience investments into capital planning from day one.
- Negotiate a purchase price that reflected the true cost of ownership.
Why This Matters: Climate-Risk Informed Due Diligence in Action
This acquisition process was a master class in how to effectively turn climate risk into a strategic advantage. The team showed how physical climate risk can be:
- Identified early in the acquisition process.
- Quantified in financial terms at a building-system level.
- Managed with targeted, cost-effective solutions.
Acquisition teams who embrace this approach protect value, negotiate stronger deals, and future-proof their portfolios with data-backed confidence.