Brownfields Capital's New Financing Solution Unlocks the Value of
Contaminated Land for Large-Scale Investors and Owners for the First Time
Gold Hill Mesa, Colorado Project Funding Sets Precedent Needed to
Accelerate Brownfield Redevelopment From Niche to Industry
DENVER, April 12 -- Brownfields Capital, a specialty
lending and investment management firm with a patented financing solution
for the remediation and redevelopment of brownfield properties, today
announced the closing and funding of its first project, Gold Hill Mesa, a
prime urban property in Colorado Springs, Colorado. The completion of this
transaction marks a significant milestone in brownfields redevelopment as
it validates Brownfields Capital's patented financing platform. For the
first time, this process opens the brownfield market to large scale
investment capital and enables owners of contaminated property to finance
their environmental liabilities without negative impact to their core
business, while unlocking and participating in the redeveloped value of the
property.
The patented process and financial instrument introduced by Brownfields
Capital are similar to past innovations in real estate financing, such as
Commercial Mortgage Backed Securities (CMBS). The Brownfields Capital
platform is a transaction process coupled with a financial instrument
called a Brownfields Value Contract (BVC), designed to enable institutional
and private capital to be deployed to restore environmentally contaminated
properties to productive use. In addition, the BVC actively shields
investors, owners, future owners and communities from current and future
risks associated with environmental impairment.
"The brownfields real estate market is enormous and has been estimated
by industry observers at approximately $2 trillion. But to date, less than
$3 billion of capital has been raised to target investments in
environmentally impaired properties because of the real or perceived
risks," said Cheryl Hoffman, the founder and CEO of Brownfields Capital.
"Brownfields Capital provides a complete capital market solution for
brownfield investment and redevelopment by addressing the needs of both
buyers and sellers. The process insulates institutional investors from the
reach of environmental law and simultaneously provides owners a fully
financed capital structure and business plan."
The Brownfields Capital Platform
The Brownfields Capital process aligns all parties needed to
characterize, remediate, insure, entitle, land-plan and redevelop polluted
sites in a single set of interdependent agreements before significant
capital is invested. Aligning the interests of all involved parties and
providing all capital through a single financial instrument mitigate the
negative impact of time delays, transaction costs and other unknown risks.
The Brownfields Capital process recognizes that brownfields
redevelopment differs from traditional real estate development, thus the
capital structure must be different, too. The process creates a special
purpose vehicle (SPV), which is an entity formed with the expertise to own
and redevelop the property and finances that entity through a Brownfields
Value Contract (BVC). The SPV is created when the owner of the contaminated
site contributes or sells the property and all of its rights to the SPV and
takes back marketable equity ownership in the SPV. The fully capitalized
SPV owns and controls the site and assumes responsibility for remediation
and redevelopment, allowing the site owner to remove any contingent or
actual liabilities associated with the site from its financial statement.
The establishment of the SPV, and its supporting business plan, creates a
way to finance cleanup and development away from the owner's balance sheet
and protects its shareholders from losses and risks.
By financing the full redevelopment as a fully committed corporate debt
facility, the cost of capital is reduced to the lowest possible level and
thus creates the highest and only predictable equity residual. At the same
time, risks to all parties are substantially mitigated, including many
risks of traditional development, as well as environmental risks.
"Through the process, distressed, immobilized owners of contaminated
real estate can now be converted into willing sellers, unlocking access to
some of the most desirable inventory of urban development in the country,"
said Eugene Mercy Jr., Chairman of Brownfields Capital and a Senior
Director (retired) of Goldman Sachs and Company. "In turn, large-scale
investors can invest in an unexplored but vast real estate market with
premium, non-correlated returns."
Gold Hill Mesa Development
For more than 50 years, Gold Hill Mesa, a 210-acre former gold mill
site located in the heart of Colorado Springs, remained idle as a result of
environmental concerns. Colorado Springs, one of America's top ten places
to do business according to Forbes magazine, has fully developed its urban
greenfield land, leaving Gold Hill Mesa, nestled between the Front Range
and downtown, as one of the last prime inner city parcels of land for
development.
The land is the former site of the Golden Cycle Mill, a gold and silver
mill that began operations in 1906 and processed over 800 tons of ore per
day. Operations ceased in 1949, leaving behind a mesa comprised of 14
million tons of gold tailing-infused soil. Over the past three decades,
attempts to reprocess the tailings to recover remaining metals or redevelop
the site have failed.
"Before Brownfields Capital, financing the redevelopment of a
brownfield site could be even more difficult than the clean-up itself,"
said Robert Hadley, a principal of Gold Hill Mesa Partners, LLC, owner of
the Gold Hill Mesa property. "As an owner of a brownfield trying to develop
in accordance with our approved Voluntary Clean-Up Plan, we were challenged
from every angle. Traditional bank construction capital simply wasn't
available. Brownfields Capital unlocked the value of the clean land,
allowing us to attract the capital we needed for best-use redevelopment."
In March 2006, Brownfields Capital provided Gold Hill Mesa Partners a
$19 million Brownfields Value Contract with an expected term of 3.25 years.
The BVC provides revolving debt financing for the complete remediation and
development of the site.
Through the 100% project financing commitment from Brownfields Capital,
Gold Hill Mesa Partners, LLC has started clean-up and development of the
site. The plan envisions a mixed-use development, drawing on the influences
of New Urbanism: a dense commercial and residential core anchored by a
community center with parks and residences. A total of 877 residential
units are being developed, consisting of condos, town homes, and
single-family detached units of various sizes. John Laing Homes, a
prominent national builder with a strong presence in Colorado Springs, has
committed to purchase more than 40% of the available lots once finished.
The development is currently underway with revenues expected to begin in
the summer of 2006, and the community center expected to open in the fall
of 2006.
Brownfields Capital
Brownfields Capital is a specialty finance/investment management firm.
It holds an exclusive license for its patented business process and
financial instrument (Brownfields Value Contract or "BVC"), which finances
the acquisition, remediation and sustainable redevelopment of brownfield
properties. Brownfields Capital serves corporations and institutions that
wish to reduce the environmental liabilities associated with owned or
acquired properties; developers and builders that wish to unlock the value
of remediated land; and investors who seek attractive low risk returns from
the redevelopment of urban in-fill properties in prime locations throughout
the world. Brownfields Capital is a financial intermediary that aggregates
investment capital, underwrites the ownership entity (borrower) and
project, and provides complete project financing. For more information,
visit http://www.brownfieldscapital.com
Contact: Steven Shapiro
303.886.6342
sshapiro@commstratgroup.com
SOURCE Brownfields Capital
http://www.brownfieldscapital.com
