How the Deals Are Done

1
How the Deals Are Done
Brownfield Redevelopment from the Private
Developer Perspective Mary B. Hashem Kansas
City Distressed Properties Forum April 29, 2004
2
Presentation Overview

• Frame of reference
• Elements of a private sector Brownfield
  redevelopment project
• Business Models and Approaches
• Keys to Success
• Case Study

3
Frame of Reference

• Eight years experience purchasing, remediating,
  redeveloping and selling Brownfield properties
• Every project was done with private equity and/or
  conventional debt, but many included some form of
  public development incentive (RDA, TIF, etc.)
• None involved Brownfield loans or grants
• All of the projects were remediated pursuant to
  state, as opposed to federal, regulatory
  requirements

4
Elements of a Private Brownfield Deal

• Acquire full title to property
• Assume responsibility to complete cleanup of the
  property
• Assume liability for environmental conditions
  present on the property at close
• Provide financing for acquisition, cleanup and
  development
• Provide varying degrees of release or
  indemnification of seller and future buyers
  against the assumed liabilities

5
Business Models

• Liability Transfer
• Acquisition and Development
• Acquiring entity
• Development participation
• Hold time, exit strategy
• Real Estate Investment

6
Keys to Success

• Real Estate fundamentals
• Environmental sophistication
• Risk identification and management
• State/local agency interaction
• Flexibility

7
Case Study Port LA Distribution Center
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Port LA Distribution Center

• Real Estate Fundamentals
• 90-acre site near the Port of LA last major
  piece of vacant land in the Port area strong
  need for warehouse/distribution capacity
• Environmental Sophistication
• Assumed operation of an existing remediation
  system negotiated for closure

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Port LA Distribution Center

• Risk Identification and Management
• Evaluating groundwater contamination and vapor
  intrusion issues underwriting and placement of
  env. insurance
• State/Local Agency Interaction
• Regional Water Quality Control Board Los Angeles
  Env. Affairs Dept., Planning Department, and
  Sanitation Bureau

10
Port LA Distribution Center

• Flexibility
• Phased development to conform with remediation
  schedule
• Management of regulatory issues
• Redesign of building pad to accommodate changed
  methane protection standards between 1st and 2nd
  phases of construction

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Contact Information
Mary B. Hashem Partner
Brownfield Partners, LLC 2801 Youngfield St.,
Suite 300 Golden, CO 80033 mhashem_at_brownfieldpart
ners.net