|From:||Emery Graham <"egraham"@ci.wilmington.de.us>|
|Date:||Thu, 8 Apr 1999 13:24:27 -0700 (PDT)|
|Subject:||Re: investment funds for brownfield reclamation -Reply|
Charles, I'm so pleased to read this short, to the point, insight about the core technology of doing a brownfieds deal; if there's not, or not sufficient, cashflow, the deal won't work. Brownfield considerations all boil down to the cost side of doing a development project that must ultimately survive, rise or fall, on the realistic cashflow of the deal. Thanks, Emery Grahm CHARLES PATRIZIA wrote: > Bruce Klafter of course is right about financings being done. I have done > two brownfields in New York, and in each instance, we were able to > use a combination of development bonds, some junior debt and equity to > make the whole arrangement work. It is true that banks are not generally > the first source for such funds, and if they do lend, it will be on a > cashflow basis and not based on taking a security interest in the > property. > > What makes a deal doable is what the proposed use is, and how the > money is going to be repaid, not what the condition of the property was > or whether it needs remediation or only use limitations. Certainly > remediation can make the arrangements more costly -- somebody is > going to pay for those activities, but ultimately the deal can only carry > so much debt and be able to service it. Local communities can help by > using industrial development bonds, and industry can help by putting in > some equity or junior debt. But if the project won't have cash flow, none > it can work. There has to be something which will generate sufficient > revenue or the development process will never happen.
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