is a supporter of
 

• Traditional Financing

• Private Equity Fund

Traditional Private Financing

There is a variety of lending institutions that provide products and resources for studies, assessments, site remediation and brownfields redevelopment.

The major banks of Canada have always been recognized as the traditional sources for financing large developments. Concerns regarding lenders’ liability have led to the need and development of other private funding sources. Private lending institutions that are involved in brownfield transactions include: chartered banks, credit unions and trust companies.

Exposure to a customer’s environmental risks is a significant concern for lending institutions that may be held liable for substantial cleanup costs and other liabilities that exceed the risk protection and financial depth of most borrowers. Prior to securing financing, a potential stakeholder/developer must be prepared to answer a series of questions that would satisfy a potential lender’s concerns of investing in a redevelopment transaction while reducing their exposure to risks and liabilities.

Please review the subsections of Brownfields Toolbox - Financial Barriers in Step 2 - Evaluation, which provides key points on: Lenders' Concerns, The Advantages, What the Lender Needs to Know, and Typical Provisions in Loan Agreements.

The Kilmer Brownfield Equity Fund LP is run by experienced brownfield specialists at Kilmer Brownfield Management Limited, a division of the fund's sponsor, Kilmer Van Nostrand Co. Limited (KVN). The fund is the first private equity fund in Canada dedicated exclusively to the redevelopment of brownfields. The $100 million fund is structured as a limited partnership with both institutional and private investors. In 2006, the Fund was awarded a Special Brownie Award by the Canadian Urban Institute in recognition of its innovations in the financing of brownfields. This is relevant because the difficulty in accessing capital through conventional real estate financing channels has been a traditional stumbling block to brownfield redevelopment

The Fund is a specialized developer which acquires brownfield properties and redevelops them for its own account and is financed with equity provided by its investors. For clarification, the Fund is not really a financing source for third-party brownfield developers, though, in certain cases, the Fund will consider partnering with owners of brownfield sites.

The Fund works closely with vendors of environmentally-impacted sites to ensure that their particular needs are satisfied. The investment process for the Fund is as follows:

• The Fund targets brownfield projects where the total redevelopment budget falls in the $5 to $15 million range, with a maximum of $20 million equity invested in any single project.
• The Fund will acquire a brownfield site and will provide indemnification to the vendor for environmental liability.
• Redevelopment consists of remediation to regulatory site closure and often rezoning to a higher-and-better end land use.
• When the redevelopment is completed, the restored site is sold to a developer or end-user, who will complete the development process through the vertical build-out of the site.

The Fund is managed by a team of experienced brownfield specialists and includes leaders in the Canadian brownfield industry. The collaboration of the different specialty areas represented within the Fund's management team—which include environmental risk management, real estate planning and development and finance—is a critical component of the Fund's ability to manage risk and unlock value in its brownfield redevelopment projects. Successful redevelopment strategies arise from the dialogue between these disciplines and are constantly refined through an iterative approach.

For futher information, including projects by Kilmer, please visit the Kilmer corporate profile.

www.kilmergroup.com/brownfield/