oneia pam kraft presentation
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Kilmer Brownfield Equity Fund L.P.
March 3, 2011 (Toronto)
Unlocking Ontario’s Brownfield Market: Trends and Challenges
Kilmer Brownfield Equity Fund L.P. Who We Are
Kilmer Brownfield Equity Fund L.P.
• $100 million Canadian private equity fund
• Structured as a Limited Partnership, headquartered in Toronto
• Mix of Canadian institutional and private investors
• Experienced management team
• Well-regarded and experienced sponsor, Kilmer Van Nostrand Co. Limited
• First dedicated Canadian brownfield fund
The Fund’s Focus
• To generate attractive returns to investors through the redevelopment of Canadian brownfields:
Acquire, remediate and reposition land; sell “shovel-ready” for build-out
Manage risks to an acceptable level
• Deal size: $5 million to $15 million; Maximum $20 million equity in any single project
• National mandate
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Kilmer Brownfield Equity Fund L.P.
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Purchase
As-Is Demolition
Remediation
Regulatory
Site Closure CIP
Incentives
Indemnification
Investment Trends
Total Investment
Market Value
VALUE ACCUMULATION
Financing Not Available Financing Available
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Kilmer Brownfield Equity Fund L.P.
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Maintaining Employment Lands
Policy Trends
• Policy supporting retention of “Employment Lands” presents challenges for Brownfield redevelopment:
• Need increased land value (higher/better use) to support remedial costs
• Little/no market for industrial/office lands
• Municipalities are finishing/have finished studies (Toronto to initiate comprehensive review this year)
Kilmer Brownfield Equity Fund L.P.
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Intensification
Development Trends
• Intensification is occurring via:• Higher density residential (more options coming via changes to the Ontario Building
Code)
• Mixed-use developments; Different types of developers teaming together
• Transit investment (ie. Kitchener/Waterloo; Guelph; Mississauga)
• Intensification means higher end land values to pay for remedial works
• Parking can be a limiting factor: market demands vs. municipal requirements vs. cost to provide
Kilmer Brownfield Equity Fund L.P.
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Changing Business Strategies
Development Trends
• Toronto developers moving to secondary markets
• Developers in secondary markets are becoming more creative
Proposed “Breithaupt Block”, Kitchener (Perimeter Development Corp)
Kilmer Brownfield Equity Fund L.P.
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Developers and the Environmental Approval Process
Development Trends
• Developers warming up to “Risk Assessments”
• Apprehension remains attached to “Certificate of Property Use”
Balance between risk and return... some risks remain unacceptable to developers.
Kilmer Brownfield Equity Fund L.P.
“Greenfield” vs. “Brownfield” – Property Taxes During Development
1. Current State of Site
Activities
3. Rezoning Approved
4. Subdivision Approved
5. Initiate Site Servicing
2. Building Demolition (Brownfield
Only)
Vacant IndustrialActive Farming
Building Demolished, Remediation
BeginsFarming Continues
Remediation ContinuesFarming
Continues
No Difference in On-Site Activities
Remediation FinalizedFarming
Continues
Prop
erty
Tax
es O
wed
(Per
yr P
er S
tage
)
Stage of Development
Brownfield Property Taxes Greenfield Property Taxes
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Property Tax Challenge
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Kilmer Brownfield Equity Fund L.P.
Difference in Cumulative Taxes
Stage of Development/Redevelopment (Totals 3 Years)Total
Property Taxes Owed
(End year 3)
Current State of Site
Activities(6 months)
Building Demo (Brownfield)
(1 year)
Rezoning Approved
(6 months)
Subdivision Approved
(1 year)
Brownfield(15ac; 200,000sf
building to be demolished)
$100,769 $72,554 $47,032 $94,063 $314,418
Greenfield(15 ac; actively
farmed) $49 $98 $49 $35,038 $35,234Difference $279,184
Property Tax Challenge
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Kilmer Brownfield Equity Fund L.P.
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Other Issues
Challenges
• Knowledge Barriers:• Municipal staff in large urban centres don’t fully understand implications of
building location, built form, land uses and the additional costs of brownfield remediation/redevelopment
• Despite municipal support, time lag to actually implement CIP programs
• Failing Municipal Infrastructure:• Costs to Developer (often unforeseen/more
significant than anticipated)
• Sticker shock to municipalities
• Existing impact to the environment
• Lack of Ability to Finance Brownfields
Kilmer Brownfield Equity Fund L.P. Contact
Pamela KraftDevelopment Manager
Kilmer Brownfield Management Limited
www.kilmergroup.com/brownfield/
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