The Ginkgo Fund
GENERAL PRESENTATION
Bruno Farber
ULB - Green Management Module
1
INTRODUCTION
THE INITIATORS & THE FUND’S STRUCTURE
INVESTMENT CRITERIA AND STRATEGY
INVESTMENT PROCESS
PROJECTS PRESENTATION
2
Introduction
Context
Today we face two crises: a deep global financial crisis and an even deeper climate and
environmental crisis. There is a window of opportunity to act on the financial crisis and, at
the same time, lay the foundations for a new wave of growth based on the technologies
for a low-carbon economy (J. Stiglitz & N. Stern)
Towards a green recovery : there is growing consensus among policy-makers and investors
around the world that sustainable investment strategies – including in urban
(re)development - are a cornerstone of the revitalisation of the economy
3
Introduction
Key drivers
The Fund aims to capitalise on several key drivers, in particular:
 The existence of a large number of brownfields, in the context of scarcity of
well-located semi-industrial, commercial and/or residential land in Europe;
 The recent emergence of new, more cost-efficient soil remediation techniques;
 Increasing European legislative pressure on (a) operators of contaminated sites
to undertake expensive remedial actions, and (b) real estate developers to meet
stricter energy-efficiency standards in light of the need to meet CO2 emissions
reduction targets;
4
Introduction
Value cycle
The Fund sees the opportunity to contribute to create a virtuous value cycle :
 for investors in terms of financial value after redevelopment;
 for local authorities through the restoration of tax revenues to idle and/or
abandoned sites;
 for communities through improvements of public health issues and other social
benefits (e.g. improved neighbourhoods and higher property value)
 for the environment and climate through land restoration and reduced energy
consumption in buildings.
5
Introduction
Mission
The Ginkgo Fund aims to build a diversified portfolio of contaminated sites and to
remediate them, before reselling them at a premium to third parties.
In certain cases, after remediation the Fund will seek to maximise value through the
development of “green” real estate projects.
The geographical focus is Belgium and France.
The Fund is targeting an IRR of 15% over an 8 year period (with two one-year additional
extensions).
6
Introduction
Key Positioning
The Ginkgo Fund will focus on :
Sites with a pollution record – chemical or UXO - only
Small to mid-size (approximately 1 to 20 ha) environmentally impaired sites
showing attractive real estate potential
Equity commitment between €5 and €15 million per project and prudent leverage
The territories of France and Belgium
Rigorous risk management
Pragmatic, innovative and virtuous approach to brownfield remediation
Pioneering projects with the public sector through a unique skill set in the
structuring of public-private partnership
A fully committed team working with the best specialist advisors
The Ginkgo Fund aims to become the largest brownfield fund in Europe and benchmark
amongst its peers
What the Ginkgo Fund is not :
A “socially responsible” alibi fund
A high promotion/development real estate speculation fund
A vehicle seeking public subsidies
A procurement tool for feeding the businesses of its shareholders
7
Introduction
Ginkgo’s focus on remediation : more, faster and better
Ginkgo is involved only in large/high percentile remediation operations
•
•
•
the pipeline average remediation budget is 800 K€ per hectare
benchmark data (Sita Remediation 2006) indicate that over 90% of remediation
projects are under the 100 K€ budget and only 1% over 600 K€
current pipeline decontamination budget represents approx. 35% of equity
requirements
Remediation and real estate development processes are interdependent and need to be
integrated
• the degree of remediation is always associated with a future land use/function
• soil legislation is evolving toward a risk-based approach, i.e. removing the risk for a
given use/real estate function
• for many brownfield sites, development benefits do not compensate associated
costs : only a handful of redevelopment projects are economically feasible (approx. 4%
of sourced pipeline) and only for investors with relevant expertise
8
Introduction
Ginkgo’s focus on remediation : more, faster and better
Ginkgo adopts a vertuous but pragmatic approach towards remediation
• in France, approx. 54% of the "remediation" is pollution displacement and landfilling
(source: BIPE, 2005)
• Ginkgo uses landfilling only as last resort solution
Ginkgo's activity brings significant ancillary societal benefits beyond soil remediation
• reduction of public health issues
• benefits of sustainable real estate developments
• prevention of urban sprawl and revitalisation of urban areas with existing infrastructure
Ginkgo provides an accelerator for public soil remediation
• public entities have limited budgets and resources
• public remediation approaches are often slow and sub optimal processes
• Ginkgo implements innovative partnering relationship/PPP that are a catalyser for
public projects
9
INTRODUCTION
THE INITIATORS & THE FUND’S STRUCTURE
INVESTMENT CRITERIA AND STRATEGY
INVESTMENT PROCESS
PROJECTS PRESENTATION
10
The Initiators :
Compagnie Benjamin de Rothschild
Edmond de Rothschild Group
International banking group
Key figures
 €100 billion
in assets
under management
 2500 employees
 Rothschild:
7 generations of
experience, competence,
confidentiality, integrity and
confidence
37 Offices
in 15 countries
11
The Initiators : BeCitizen
 Founded in 2000, BeCitizen is an environmental
strategy consultancy which delivers to its clients
radically innovative turnkey solutions that create
new opportunities for growth by restoring the
environment.
 BeCitizen acts, through its interventions, as a
driving force behind the Positive EconomyTM*
concept.
 Its 30-people team develops with its clients and
partners turnkey solutions that are radically
innovative and create growth opportunities in
climate and environment areas by:
 thinking tomorrow’s economy and designing
solutions sector by sector;
 delivering innovative products and business
models;
 offering innovative financial solutions to
accelerate solution implementation.
Positive Economy™
Positive Economy™ generates economic growth
that restores ecological capital, i.e. the capacity of
environment to supply economy with resources
(energy, raw materials) and services (carbon
storage, waste recycling, water treatment, etc.).
The Positive Economy™
principles are described in the
book Réparer la Planète coedited by BeCitizen et JC Lattès.
This “environmental best seller”
has won several awards in
France.
* Positive Economy is a registered trademark of BeCitizen.
As concept creators, BeCitizen wishes to ensure its widest
dissemination, and the respect of its original meaning.
Member of “Conseil National du Développement Durable” (CNDD) in France and of “Autorité
Environnementale du Conseil General de l'Environnement et du Développement Durable” (CGEDD)12
The Fund’s structure
Actionnaires
Commanditaires
Ginkgo Management Sàrl (Lux)
Actionnaire Commandité
Ginkgo Advisor Sàrl (Sui)
Investment Advisor
Ginkgo Fund SCA, SICAR (lux)
100%
Ginkgo Participations (Lux)
SPV (France)
Actifs Français
SPV (Belgium)
Actifs Belges
13
The Fund’s structure
Governance structure
General Partner Board
(7 members)
Evaluate and make all investment and
disinvestment decisions on behalf of
the Fund, in addition to being
responsible for the administration of
the Fund.
Investment
Committee
(3 members)
Supervisory
Committee
(3 members)
14
The Fund’s structure
Principal Investment Terms
Capital cible : 100 m€
Return cible : 15%
Commitment period : 5 ans à dater du premier closing
Durée : 8 ans plus deux extension possible de 1 an sous condition de quorum et majorité pour
modification des statuts.
Management fee :
• Année 1 à 3 : 2% des commitments
• Année 4 : 1% des commitments appelés ou non appelés non investis et 2.5 % des
commitments appelés et investis
• Année 5 : 0.5% des commitments appelés ou non appelés non investis et 2 % des
commitments appelés et investis
• Au-delà : 2% des commitments investis
15
INTRODUCTION
THE INITIATORS & THE FUND’S STRUCTURE
INVESTMENT CRITERIA AND STRATEGY
INVESTMENT PROCESS
PROJECTS PRESENTATION
16
Investment criteria and strategy
Site identification
Size
Location
Pollution
Focus on small to middle sized (approximately 1 to
20 ha) environmentally impaired sites
Focus on attractive location that provide the
opportunity to redevelop “landmark” projects
Brownfield sites characterised using, inter alia,
official national and regional databases of polluted
sites ( BASOL, OVAM, IBGE, WALSOL..).
17
Investment criteria and strategy
Diversification guidelines
Project
diversification
Aggregate Commitments for an individual project :
< 20%
Between €5 million and €15 million
Ginkgo aims to invest in 7 to 10 Projects.
Geographic
diversification
Belgium and France
One country < 75% of Aggregate Commitments.
Real estate
project
diversification
Well balanced and diversified real estate portfolio, comprised of
constructable land, offices, residential units, retail and semiindustrial buildings (e.g. logistics centres)
One class of real estate asset < 65% of the funded Commitments
after the Commitment Period.
18
Investment criteria and strategy
Leverage and SPVs
Leverage
Ginkgo holds no debt
The SPVs may have the possibility of being reasonably leveraged in line
with the practices of debt markets with regards to the financing of these
types of Projects (i.e. debt to equity ratio)
Interest rate risk or currency risk will be hedged to cover potential
increases in the cost of debt financing
SPVs
One or more SPVs will be created for every new Project
Each SPV will hold the assets and the debt
Ginkgo can invest in one or more existing SPVs with ongoing brownfield
remediation Projects
19
Investment criteria and strategy
Investment Duration
Commitment
period
The duration of the Commitment Period shall be limited to 4 years starting
from the date of the Last Closing of Ginkgo
Investment
period
Ginkgo will not initiate investments in new projects after an investment
period of 4 years
Investment
duration
An average duration of 4 years between a Project’s initial investment and its
final divestment (project’s lifecycle) will be sought
20
Investment criteria and strategy
Land Acquisition
Property right
Ginkgo will - indirectly though the SPVs - acquire full property or be
granted property right (e.g. Emphyteusis or Surface area) in brownfield
sites
Pollution record
Only sites for which a pollution record exists will be acquired by the
Ginkgo.
Negotiation with
the land owner
Ginkgo will assume the structuring and negotiation of purchasing terms
with the land owner (e.g. transfer or public private partnership approach
with recourse to various legal mechanisms such as Emphyteusis or
Surface area).
Value
assessment
The acquisition process will generally entail the assessment of the value
of the land and other assets acquired by Ginkgo by an independent
evaluator.
21
Investment criteria and strategy
Remediation
Definition
Actions on the soil aimed at the removal, control, containment or reduction of
contaminants so that the contaminated site, taking account of its current use and
approved future use, no longer poses any significant risk to human health or the
environment
Type of pollution
No environmental contamination type will be excluded a priori : inorganic
substances (e.g. heavy metals, asbestos), organic substances (e.g. hydrocarbures
chlorinated solvents), or military/UXO pollution
Remediation
techniques
Only efficient and proven remediation techniques will be used.
Remediation projects will to the greatest extent possible avoid pollution transfer
and landfilling, which will only be decided as a last resort.
Based on a methodology taking into account societal, environmental, economic
and technical criteria
Environmental
risk mitigation
Monitoring
strategies
The remediation process will generally entail the use of appropriate insurance
policies or guaranteed fixed price remediation contracts in order to limit
environmental liability and/or cap remediation expenses
The remediation process will be complemented with adequate monitoring
strategies when the need arises.
22
Investment criteria and strategy
Development
Energy efficiency
Building development will take into account energy-efficiency criteria.
Real estate Projects that do not demonstrate significant energy efficiency will not
be undertaken.
Authorisation and Real estate development will be part of an official urban development
plan/strategy : will take place only if the future use of the land has been identified
permits
and approved by the relevant competent authorities.
Market risk
mitigation
The construction phases will be initiated only after the securization of
presale/preletting or similar forward commitment of whole or part of the
buildings has been obtained in order to mitigate or neutralize market risk.
Exclusions
Projects of which the end-use of the property (through leasing or selling them off)
falling into the following categories are explicitly excluded :
• Focus on weapons and ammunition, arms, military or police equipment or infrastructures, and equipment or
infrastructure limiting people’s individual rights and freedom;
• Focus on gambling and related equipment;
• Focus on tobacco manufacturing, processing, or distribution;
• Involve live animals insofar as compliance with the “Council of Europe’s Convention for the Protection of Vertebrate
Animals used for Experimental and other Scientific Purposes” cannot be guaranteed;
• May potentially cause lasting environmental damage;
• May potentially restrain or reduce human rights;
• May potentially lead to ethically or morally controversial disputes.
23
INTRODUCTION
THE INITIATORS & THE FUND’S STRUCTURE
INVESTMENT CRITERIA AND STRATEGY
INVESTMENT PROCESS
PROJECTS PRESENTATION
24
Investment process
Overview
SOURCING
INVESTMENT
APPRAISAL
FINANCING
REMEDIATION
MONITORING
Acquisition
PLANNING & PERMITS
EXIT
EXIT
BUILDING
DEVELOPMENT
25
Investment Process
Strategic
partners
Internal network
Public entities /
local authorities
Investment appraisal process
Sourcing
contributors
Sourcing
Industrial clients
Real Estate &
Environment
Specialised
network
Conferences,
trade fair,
brownfield
remediation
network
Others
Curators, bankruptcy
liquidators and trustees
Political stakeholders,
shareholders and coinvestors…
Over 100 unqualified projects*
Level 0
Approx. 40 prequalified projects*
Level 1
Approx. 15 qualified projects*
Level 2
4 projects
presented to the
GP Board*
Level 3
26
* Over a 1 year period of time
Investment process
Investment appraisal process - Filters
TECHNICAL
FEASIBILITY
Building
Remediation
Environment
MARKET
OPPORTUNITY
PROFITABILITY
Financial return
Site attractiveness
Timing
Real estate market
Risk assessment
Urbanistic situation
SUSTAINABILITY
Energy efficiency
Social
Environmental
27
Investment process
Investment appraisal process - Phasing
PHASE 1
Site Prequalification :
Initial Review
PHASE 2
Site Prequalification :
Iterative Review
PHASE 3
Project
Qualification
Attractiveness of the
location
Residual land value
calculation
Extensive Due
Diligence
Site investigation
Redevelopment
potential
Risks mitigation
Financial and legal
structuring
Preliminary
redevelopment
scenarios
PHASE 4
Site purchase
recommendation
Final purchasing
decision to be made by
the Board of Directors
of the General Partner.
Financial feasibility and
estimated return (ROI)
Preliminary financial
and legal structuring
GO / NO GO
GO / NO GO
GO / NO GO
28
Investment Process
Financing
Optimal
financing
structure
Debt assignment
Selection of the optimum mix of financing methods in order to optimize
the profit margin and of project debt financing on the best terms
Project debt financing will be located at SPV level
Debt to equity
ratio
The debt to equity ratio will be conservative and in line with market
practices with regards to the financing of these types of projects.
Risk mitigation
The interest rate risk or currency risk will be hedged to cover potential
increases in the cost of debt financing.
29
Investment Process
Remediation
Internal and
external Experts’
support
Remedial strategy design is carried out by the environmental experts of the
Investment Advisor.
The Investment Advisor’s external environmental and legal advisors may provide
technical assistance and support to the Investment Advisor’s environmental experts
in charge of managing the brownfield remediation process.
Expertise of environmental legislation and regulatory support in the investigation
and remediation process will be provided by the Investment Advisor’s legal advisors.
Remediation
process
Illustrative steps of the remedial process :
• Site reconnaissance and further soil investigations;
• Descriptive investigations;
• Site remediation investigations;
• Technical and economic analyses for site remediation;
• Laboratory feasibility tests
• On-site pilot tests
• Remedial design and implementation;
• Geotechnical studies;
• Monitoring of soil and ground water quality;
• Risk evaluations and analysis;
• Groundwater modelling;
• Modelling of dispersion and migration of contaminants;
• Risk management.
30
Investment Process
Planning & Permits
Contact with
authorities
Official contacts are made by the Investment Advisor with the authorities
responsible for the granting of various appropriate permits (e.g. town
planning and environmental certificate) and necessary authorizations.
Assistance of
external experts
If necessary, the Investment Advisor will seek the help of relevant third
party experts for the application for planning permission from the
competent authorities in line with their town development plans, as well
as the assistance of its environmental and legal advisors.
Risk mitigation
Whenever possible, Ginkgo will participate in the acquisition of
brownfield land on the basis of approved (or soon to be approved)
zoning which is consistent with a project development plan which has
been carefully reviewed and approved in advance.
31
Investment Process
Building Development
SPVs and
partnerships
Construction risk
mitigation
Monitoring
Ginkgo expects to make its investments through SPVs, which it may set
up together with other developers and partners
Ginkgo will not take direct responsibility for the management of the
construction process, leaving such responsibility to a third party – for
instance building developer-partner or a third party designated by it who will act on behalf of the joint project vehicle
As a rule, several offers from various builders will be sought and, in
addition to the construction management tasks performed by its building
developer-partner, Ginkgo will also closely monitor the construction
quality and the building progress
32
Investment Process
Exit strategy
Strategy
Ginkgo’s intention is to develop the portfolio so that significant capital appreciation can be
achieved. This value will be realised by the part or complete sale of individual
investments when considered most appropriate with regards to the maximisation of
shareholder value.
Timing
Possible exit strategies include divestments at different points of the investment lifecycle :
1) After remediation but prior to the obtainment of the ad hoc building permits
(unlikely but may arise in exceptional circumstances)
2) After remediation and the obtainment of the ad hoc building permits but prior
to the building development phase
3) After the building development phase, with possible short term renting
IRR objective
per project
An exit strategy contributing to a consolidated annual IRR of at least 20% will be clearly
identified for each project.
33
INTRODUCTION
THE INITIATORS & THE FUND’S STRUCTURE
INVESTMENT CRITERIA AND STRATEGY
INVESTMENT PROCESS
PROJECTS PRESENTATION
34
PROJECTS
INVESTMENT APPRAISAL METHODOLOGY
PHASE 1 -
PHASE 2
Site Prequalification :
Initial Review
Site Prequalification :
Iterative Review
Attractiveness of the
location
Residual land value
PHASE 3
Project Qualification
Extensive Due
Diligence
Risks mitigation
Site investigation
Redevelopment
potential
Preliminary
redevelopment
scenarios
Financial feasibility and
estimated return (ROI)
Financial and legal
structuring
Preliminary financial
and legal structuring
35
PIPELINE
LEVEL 3 QUALIFIED PROJECT
“CRAEYENHOF” IN BURCHT (BELGIUM)
INVESTMENT APPRAISAL
36
OVERVIEW
Burcht - BELGIUM
Former petroleum storage depot site located in the center of
Burcht, Zwijndrecht along the river Schelde and with proximity
to Antwerp. Potential PPP with the bordering municipal land
as an integrated Brownfield redevelopment.
Type
Former petroleum storage depot located in a municipal area
Owner
Craeyenhof nv (100 % SPV of ReGenius)
Location
Burcht (Zwijndrecht), Belgium
Size
1.1 ha
Pollution
Hydrocarbons, mineral oils, heavy metals, BTEX (benzene)
Sourcing
Brocap
Status
Potential Ginkgo co-investment in existing SPV
Project
Residential, as part of a new Masterplan
37
PHASE 1
Attractiveness of the location
Burcht - BELGIUM
Antwerp
city
center
The “Craeyenhof” site is
implanted in the center
of Burcht, on the left
bank of the Schelde, 5
km from and with direct
view on the city center
of Antwerp
Pedestrian
and biking
tunnel
Site
38
PHASE 1
Attractiveness of the location
Burcht - BELGIUM
Church of
Burcht
(center)
The “Craeyenhof” site is
situated immediately
near the church of
Burcht and in walking
distance of a main
green recreational
municipal area
Site
Recreation
facilities
39
PHASE 1
Attractiveness of the location
Burcht - BELGIUM
Along the Kerkstraat, part of a
residential area.
Provides easy access to city centre
and main roadways
No buildings on site; remaining
foundations and subsurface
structures
Site historical activities include
•Oil and fat production – Gulf
(before 1950)
•Storage oil products – Belgomine
(1950-1975)
•Petroleum depot – Coppens
(1975-1998)
•Empty and abandonned
(since 1998)
•Acquisition by ReGenius in 2007
40
PHASE 1
Site investigation redevelopment potential
Burcht - BELGIUM
Legal parameters
The “Craeyenhof” site is one of the 42 listed brownfield sites selected by the Flemish Government to
negotiate and sign a ‘brownfield convenant’ (application successfully filed by Brocap).
The Flemish government decree of March 30, 2007 regarding the brownfield convenants allows
for:
• a convenant to be negotiated between the Flemish government and the private/public
owner(s) of a brownfield site in which a mutual agreement is made about administrative
procedures, timing and certain requisites to make the project feasible and realizable
• one contact point for all legislative matters concerning spatial and urban planning, the
environment, permits, registration, ...
The municipality of Zwijndrecht is the owner of the bordering parcel and willing to consider a PPP in
order to allow for an integrated and uniform redevelopment project along the Schelde riverbank
41
PHASE 1
Site investigation redevelopment potential
Burcht - BELGIUM
Legal parameters
Ownership:
A: public
parking area –
municipality
B: bordering
parcel –
municipality
C: Craeyenhof
site – ReGenius
D: small and old
apartment
building (6
units) – private
owner
42
PHASE 1
Site investigation redevelopment potential
Burcht - BELGIUM
Urbanistic parameters
The site is already located in
a residential zone
The municipality of
Zwijndrecht is developing a
Masterplan for the river
embankment
Current zoning regulations
allow for the construction
of 3-floorlevel buildings
Site
43
PHASE 1
Site investigation redevelopment potential
Burcht - BELGIUM
Urbanistic parameters
Masterplan under
development by the
municipality of Zwijndrecht:
“Dorp aan de Stroom”
(“Village at the River”)
“Craeyenhof” only privately
owned site within project
area to be redeveloped
44
PHASE 1
Site investigation redevelopment potential
Burcht - BELGIUM
Urbanistic parameters
Masterplan “Dorp aan de
Stroom” designed by urban
planners Secchi & Vegano
(Milan)
In finalisation stage
Formal approval by the
town council expected in
the coming months
Site
45
PHASE 1
Site investigation redevelopment potential
Burcht - BELGIUM
Urbanistic parameters
Masterplan foresees in the
construction of 4 apartment
buildings on the
“Craeyenhof” site and
about 14 ‘kangaroe’ houses
on the neighbouring parcel
of the municipality
A water-taxi facility on the
bordering former shipyard
is also proposed
Along the waterfront a walk
and bike trail is envisaged
46
PHASE 1
Site investigation Redevelopment potential
Burcht - BELGIUM
Redevelopment objectives of the parties
Municipality of
Zwijndrecht
ReGenius
RRE
EGGENIUS
ENIUS
RE
The Ginkgo
Fund
Opportunity to offer new high-quality housing with excellent visibility to
new residents
Put Zwijndrecht on the residential real estate map within the Antwerp
region
Innovative financing solution through PPP approach for the development
of their own parcel
Realize a real estate project with high visibility
Capitalize on local ‘green party’ government to execute a strong
environmental and green redevelopment project
Obtain sufficient capital to provide high quality standards
Direct access to project in full ownership and already in preparatory
permitting stage
Potential for a highly visible PPP brownfield redevelopment project
Partner with excellent local knowledge and contacts
47
PHASE 1
Site investigation Redevelopment potential
Burcht - BELGIUM
Real estate parameters
The municipality of Zwijndrecht (ca. 18’000 inhabitants) wants to offer additional
housing opportunities for new residents (current residential zoning potential limited)
The waterfront location, with view on the Antwerp skyline, provides a strong attractive
factor
The municipality of Zwijndrecht has one of the lowest municipal taxation rates in the
Flemish region
The city of Antwerp and the nearby harbour form an attractive social, cultural and
professional catalyser
A market study shows that the average yearly fiscal income in Zwijndrecht and
surroundings lays well above the Flemish average
Recent residential apartment sales prices in Zwijndrecht (not on the waterfront) are in
the range of and slightly above 2000 Euro/sqm; similar prices on the Antwerp quays are
well above the double
48
PHASE 1
Site investigation Redevelopment potential
Burcht - BELGIUM
Real estate parameters
The 4 apartment blocks
provide for approx.
• a F/L ratio of ca. 0.9
• 4 floorlevels
• 80 to 120 units
• 80 – 120 m²/unit
• 100 – 120 parkings
underground and 20 – 30
parkings aboveground
The 14 ‘kangaroe’ houses
provide for approx. 40 units
on 1-2 floorlevels
49
PHASE 1
Preliminary redevelopment scenarios
Burcht - BELGIUM
Real estate parameters
An exchange of land with
the municipality needs to
be negotiated: the area of
the municipal parking
versus a strip at the western
part of the site
Negotiation with the owner
of the private apartment
block
50
PHASE 1
Preliminary redevelopment scenarios
Burcht - BELGIUM
Environmental parameters
A soil remediation project approved by the OVAM exists since 2001
However, due to incompleteness and incompatibility with a redevelopment project,
ReGenius has prior to and since its acquisition of the site performed additional
detailed soil and groundwater investigations
ReGenius is currently shaping a new remedial design totally integrated with the
projected real estate development on the site, in collaboration with URS and HUB
Main findings of the contamination are:
• a soil contamination with primarily petroleum products (mineral oils, PAH’s, BTEX)
• an undeep groundwater contamination with mineral oils and BTEX
51
PHASE 1
Preliminary redevelopment scenarios
Burcht - BELGIUM
Environmental parameters
Clear distinction in 2
zones at the site
based on the type of
contamination:
• zone I: light
petroleum
hydrocarbons
(mineral oil and BTEX)
• zone II: heavy
petroleum
hydrocarbons
(mineral oil and
PAH’s)
52
PHASE 1
Preliminary redevelopment scenarios
Burcht - BELGIUM
Environmental parameters
Soil contamination at
the site in the upper 1
m layer
(red = above soil cleanup
standard; purple = above 10
x cleanup standard)
53
PHASE 1
Preliminary redevelopment scenarios
Burcht - BELGIUM
Environmental parameters
Groundwater plumes
contaminated with
mineral oil at the site
54
PHASE 1
Preliminary redevelopment scenarios
Burcht - BELGIUM
Environmental parameters
Remedial scenarios will include a combination of excavation of hot-spots, in-situ
treatment of BTEX (zone I), on-site biological or off-site thermal treatment of the
excavated soils and safe reuse and/or appropriate isolation of cleaned soil and/or
soil with residual levels but without risk
Remedial estimates (incl. VAT) vary between
• ca. € 900’000 in case of in-situ treatment (BTEX) and optimal reuse/storage onsite (best case)
• ca. € 2’800’000 in case of complete excavation followed by thermal treatment
(worst case)
A likely remedial scenario will be in the order of € 1000’000 to €1’500’000.
Smart engineering of remedial and redevelopment design, for instance for location
of underground parking area and for site leveling purposes, can contribute to
substantial savings in the remedial budget
55
PHASE 1
Preliminary redevelopment scenarios
Burcht - BELGIUM
Environmental parameters
Options for the
underground parking
(squared surface)
1. In easily
cleanable area
(BTEX)
2. In heavy oil
contamited area
to be excavated
3. In primarily noncontaminated
zone (municipal
parking )
56
PHASE 2
Residual land value calculation
Burcht - BELGIUM
Projected costs
ACQUISITION COSTS
-€ 3 015 000
Land
Fixed price
€ 1 100 000
Remediation - additional investigation
Fixed price
€ 100 000
New remedial plan
Fixed price
€ 15 000
Site remediation & removal of underground structures
Fixed price
€ 1 800 000
Gross floor areas
Capex / Sqm
-€ 18 028 998
11 125 m2
€ 1 300
€ 14 462 500
CAPEX
Appartments
Commercial
Inside Parkings & Basement
825 m2
€ 800
€ 660 000
3 000 m2
€ 500
€ 1 500 000
750 m2
€ 100
€ 75 000
Roads, infrastructure & public square
1 000 m2
€ 150
€ 150 000
Green area
5 236 m2
€ 35
€ 183 260
Utility connection costs
108 units
€ 500
€ 54 000
5.00%
of Capex and remediation costs
€ 944 238
Professional fees
12.00%
of total capex + contingency
€ 2 163 480
TRC Insurance
0.35%
of total capex + contingency
€ 63 101
Guarantee remedial obligations
0.90%
of remediation costs
Outside parkings
€0
Contingency
OPEX
Project management costs & legal fees
-€ 3 387 158
€ 150 000
€ 19 602
€ 150 000
Guarantee "Law Breyne"
1.00%
of total sales + VAT
€ 373 545
Sales fee
2.00%
of total sales
€ 617 430
€0
Date
30.09.2009
30.09.2009
30.09.2009
2010 and 2011
Start date
30.12.2010
30.12.2010
30.12.2010
30.12.2010
30.12.2010
30.12.2010
30.12.2010
30.12.2010
30.12.2010
End date
30.12.2012
30.12.2012
30.12.2012
30.12.2012
30.12.2012
30.12.2012
30.12.2012
30.12.2012
30.12.2012
Start Date
30.09.2009
30.12.2010
30.06.2010
30.09.2009
30.03.2010
id. as sales
30.09.2010
57
PHASE 2
Residual land value calculation
Burcht - BELGIUM
Projected revenues and IRR
EXIT
Sale price €/m2 or unit
Sellable floor areas
€ 2 800
10 013 m2
€ 28 035 000
Appartments
Capital rate
€ 30 871 500
Commercial
€ 1 800
743 m2
€ 1 336 500
Inside Parkings & Basement
€ 15 000
100 units
€ 1 500 000
Outside parkings
€ 5 000
0 units
€0
Final payment
30.12.2012
30.12.2012
30.12.2012
30.12.2012
DEBT FINANCING
Loan Drawdown
Debt to equity :
65.00%
Loan Capital
E3M :
Margin :
€ 15 880 252
Interest
1.70%
3.50%
€ 424 187
Financing Fee
1.50%
of maximum debt amount
€ 238 204
Legal fee - financing
0.50%
of maximum debt amount
€ 79 401
Financing fee notary
€0
Fixed price
Loan Repayment
Max loan amount :
0.00%
of after tax sales
Commitment fees
0.00%
of maximum debt amount
Millions
GFA
€7
€0
NAME :
Burcht
€6
€ 24 431 156
€ 30 871 500
26.4%
TOTAL COSTS (Acquisition + Capex + Opex) :
TOTAL REVENUES (Sales) :
Gross margin :
€5
€4
€3
€2
€1
€0
-€1
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
-€2
-€3
Ca pi tal
Di vi dends
Boni l i qui da tion
Sha rehol der Loa n
Sha rehol der l oa n - i nteres ts
IRR Project (before tax) :
IRR Project (after tax) :
IRR Shareholders :
w/o leverage
IRR Project (before tax) :
IRR Project (after tax) :
IRR Shareholders :
Debt to equity ratio of 65.00%
w/o leverage
w/o leverage
33.4%
22.2%
17.6%
Q14
Debt to equity ratio of 65.00%
Debt to equity ratio of 65.00%
48.8%
33.1%
28.5%
58
PHASE 2
Risk Mitigation
Burcht - BELGIUM
Environmental parameters
Existing study
Investment
Advisor
assessment
Identifies significant soil and groundwater contamination on site with primarily
mineral oils and BTEX. The estimated remediation budget is of €2.8 million for a
worst-case scenario but should - more realistically – be of €1.0 to €1.5 million
Thorough and extensive environmental data available
Detailed remedial scenario still to be selected and engineered; however
integration with potential redevelopment plans and scenarios on-going
Screening of biological treatment option necessary by means of external
validation (Soil Treatment Center) or an on-site pilot test
59
PHASE 2
Risk Mitigation
Burcht - BELGIUM
Environmental parameters
Mitigation
Demonstrate a virtuous approach (i.e. more than legally required remediation
approach) based on the environmental risk assessment
Negotiate an acceptable risk-based clean-up level with authorities in the
framework of the brownfield convenant
60
PHASE 2
Risk Mitigation
Burcht - BELGIUM
Development risk
Investment
Advisor
assessment
Brocap assessment :
• Approval of Masterplan and consequent zoning plan recommended
• Exchange of land (municipal parking) preferable to allow for a smooth
redevelopment process
Mitigation
Obtain approval to start phased construction in accordance with
drafted Masterplan given that the site is currently situated in a
residential zone, eventually as part of the brownfield convenant to be
negotiated
Negotiate exchange of land as soon as possible with municipality as
part of PPP contract or brownfield convenant
61
PHASE 2
Risk Mitigation
Burcht - BELGIUM
Promotion risk
Investment
Advisor
assessment
Brocap assessment :
• Strong local real estate market
• Phased redevelopment possible (4 blocks)
• Construction only started after sufficient pre-sales
• Strong interest and consultation by different local and national
project developers to team-up or to get an option to buy
Mitigation
Team up with project developers bearing the promotion risk
62
PHASE 2
Risk Mitigation
Burcht - BELGIUM
Political risk
Investment
Advisor
assessment
Change of local coalition (however unexpected)
Mitigation
Negotiate a PPP contract or sign a convention with the municipality of
Zwijndrecht regarding the land exchange (municipal parking) and a
joint and integrated redevelopment project along the riverbank
Lack of a brownfield convenant with the Flemish government
(upcoming elections in June 2009)
Design for a feasible project even without the ‘admissions’ from the
government in the brownfield convenant
63
PHASE 2
Preliminary legal structuring
Burcht - BELGIUM
Legal / PPP steps
Site
Acquisition
ReGenius already fully owns the site, through its SPV “Craeyenhof”
Capital
opening
Ginkgo partners with ReGenius (joint venture) and enters into the capital of
the SPV “Craeyenhof”
Convenant
and
remediation
ReGenius negotiates a brownfield convenant with the Flemish government
allowing for risk-based clean-up levels and approved remedial plan
PPP and
zoning
ReGenius (SPV) enters into a partnership with the municipality of
Zwijndrecht in order to execute the land exchange, to obtain zoning approval
and the necessary permits and to realize the integrated redevelopment
along the riverbank
Development
ReGenius (SPV) teams up with one or several project developers
64
PHASE 3
Due diligence
Burcht - BELGIUM
Supporting documents
General
Environmental
Site information index card – Brocap/ReGenius
URS report “aanvullend bodemonderzoek Kerkstraat”, nov. 2008
Memorandum URS remedial scenarios brownfield site Burcht, oct. 2008
Legal
Detailed note Lydian lawyers on ‘legal issues PPP redevelopment Burcht’,
sept 2007
Real Estate
Report Brocap – Market analysis
Urban
Draft masterplan, Secchi & Vegano
65
PHASE 3
Legal structuring
Burcht - BELGIUM
Transactions under way
Site
Acquisition
Negotiation with municipality regarding land exchange (municipal parking)
Convenant
Awaitening start of negotations with Flemish government coming weeks
Urban
Designing several redevelopment scenarios in line with draft Masterplan
but based on findings of soil contamination
66
ELIGIBILITY UNDER THE FUND’S STRATEGY
Burcht - BELGIUM
Eligibility under the Fund’s strategy ?
Yes
No
Project diversification
- Project size < 20% Fund’s total commitments
- 5 MEUR < Project size > 30 MEUR
- Number of invested projects < 12
Geographic Diversification
X
- France and Belgium in priority
- Total investment in one country < 75% Fund’s total commitments
X
Real estate project diversification
- One type of asset < 65% Fund’s total commitments
X
Project Internal Return Rate > 20%
X
67
PIPELINE
LEVEL 3 QUALIFIED PROJECT
VERSAILLES - SATORY (FRANCE)
INVESTMENT APPRAISAL
68
OVERVIEW
Satory - FRANCE
Former military site located in Versailles – Satory.
Potential for PPP structuration with occupants of the
“Mov’eo” automotive cluster
Type
Former military shooting range site
Owner
Ministry of Defense, with INRETS (The French National Institute for Transport
and Safety Research) holding a right of ground occupation (A.O.T.)
Location
Versailles - Satory, France
Size
1,8 ha
Pollution
Unexploded Ordnance (UXO)
Sourcing
ATEMI
Status
PPP structuration to redevelop the site
Project
Mov’eoLab building of 5’500 m2 SHON
69
PHASE 1
Attractiveness of the location
Satory - FRANCE
Versailles in a few figures
88.000 inhabitants
Density : 3.34 hab / km2
Surface : 26,18 km2
Site location
Located inside the Mov’eo cluster dedicated to the
transportation industry with the aim to attract more than
25.000 inhabitants and jobs.
Close to the historical city of Versailles, appreciated for its
quality of life and its proximity with Paris.
Good connections to Paris with 5 rail stations in Versailles and
direct access to the A86 and A12.
70
PHASE 1
Attractiveness of the location
Satory - FRANCE
Accessibility
From Versailles direct connection to Paris (Gare St Lazare,
La Défense, Montparnasse) with 5 rail stations and 3
different lines (RER C, and 2 SNCF lines)
Direct access to A86, A12 and A13
The Mov’eo Cluster
One of the 4 automotive competitive clusters worldwide
specialised in automobile and public transport technology
Regroups 127 companies and 48 research and educational
centers active in the field of transportation
EUR 215 million invested in about 60 R&D projects since
2005
Large French groups involved : PSA Peugeot Citroen,
Renault, Total, Safran, Siemens, Thalès Air Defense, Valéo,
Véolia…
Cluster development a strategic and economical priority
for territorial organisations
71
PHASE 1
Attractiveness of the location
Satory - FRANCE
Urbanistic parameters
18’000 sqm former military shooting range located in the middle of the test track
Situated next to military training ground / Nexter site (former GIAT Industrie) a French
government-owned weapons manufacturer
The site is in a zone UI, zone of mixed economic activities under the PLU.
COS (coefficient d’occupation du sol) is 0,5.
72
PHASE 1
Site investigation redevelopment potential
Satory - FRANCE
Legal parameters
The owner of the site is the Ministry of Defense (MINDEF)
INRETS holds a 30 year temporary right of occupation (Autorisation d’Occupation Temporaire du
domaine public – in short AOT) delivered by MINDEF
INRETS is a state-financed scientific and technological body under the administrative supervision of
the Ministries in charge of Research and Transport
The site is polluted with unexploded ordnance (UXO) and the responsibility for UXO clearance under
the AOT is unclear (*)
(*) La loi sur la modernisation de l’économie promulguée à
l’été 2008 :
« Lorsque la cession de ces immeubles (propriétés de
personnes publiques) implique au préalable l'application des
mesures prévues à l'article L. 541-2 du code de
l'environnement (dépollution) ou l'élimination des pollutions
pyrotechniques, l'Etat peut confier au futur acquéreur le soin
d'y faire procéder, le coût de la dépollution s'imputant sur le
prix de vente. Dans cette hypothèse, le coût de la dépollution
peut être fixé par un organisme expert indépendant choisi
d'un commun accord par l'Etat et l'acquéreur. »
73
PHASE 1
Site investigation Redevelopment potential
Satory - FRANCE
Redevelopment objectives of the parties
Mov’eo
partners
 Acceleration of site clearance & development for the Mov’eoLab
project (2011 deadline) – see real estate parameters
 Innovative financing solution through PPP approach
French public sector
representatives
 Rapid implementation of the first elements of the Mov’eo cluster
The Ginkgo
Fund
 Positionning as precursor and leader PPP brownfield redevelopment
insuring French Public Sector visibility
 Identification of a strong financial counterparty
74
PHASE 1
Site investigation Redevelopment potential
Satory - FRANCE
Real estate parameters
Selected Mov’eo partners have expressed the
urgent need for the development of at least
5’500 m2 SHON in particular :
QUASPER (QUAlification/Certification de
Systèmes de PERception),
A qualification and certification platform
for perception systems (video, infra-red,
radar, etc.) supported by Thalès  2’500
m2 SHON
Mov’eoLab (« perception et télécommunications
embarquées ») building on « Hall A » site
(shooting range) in the middle of tracks
LIVIC, a joint laboratory between INRETS
and LCPC (Civil Engineering) involved in
improving road network capacity and
safety by means of Driving Assistance 
1’000 m2 SHON
Geensys, an independent SME  2000
m2 SHON
75
PHASE 1
Site investigation Redevelopment potential
Satory - FRANCE
Real estate parameters
Other real estate projects on Satory site:
ESTACA and MOVEOTRONICS on SOGARIS land
Construction of a second building next to new INRETS building (« Hall B ») for both INRETS
and other MOVEO partners
76
PHASE 1
Site investigation Redevelopment potential
Satory - FRANCE
Real estate parameters
Total « Hall A » site surface : 20 000 sqm
COS (constructibilité autorisée) of 0.5, i.e. constructible
surface of 10 000 sqm SHON
INRETS preliminary budgetary figures for the 5’500 sqm
SHON Mov’eoLab building (R+1) on « hall A » site :
Building : € 8,3 million
Equipments : € 9,1 million (of which € 7,2 million for
QUASPER static and dynamic bench)
Constructible balance for other Mov’eo partners: 4’500 sqm
SHON
Possible extension of the project
to additional INRETS building on
« Hall B bis » site.
Surface : 2’600 sqm SHON
INRETS budget : € 4.4 million
Expected delivery in September
2010
Expected delivery in July 2011
77
PHASE 1
Preliminary redevelopment scenarios
Satory - FRANCE
Environmental parameters
Unexploded ordnance (UXO) present in the subsoil – no depollution from the Army
Historically a shooting range comprising sand pits for GIAT (middle to large caliber
machine gun and Leclerc battle tanks and ammunition)
There are currently no official study or assessment for the “hall A” site.
78
PHASE 2
Residual land value calculation
Satory - FRANCE
Projected costs
ACQUISITION COSTS
-€ 964 839
Land
Fixed price
€1
of Land price
€0
Land surveyor
Fixed price
€ 10 000
Network connections
Fixed price
€ 80 000
Notary fees
1.70%
Fixed price
€ 20 000
Urbanism tax
€ 55.43
/ SQM SHON
€ 304 838
Office creation tax
€ 0.00
/ SQM SU (offices and activities)
€0
Land inquiry
Rail & waterways network creation tax
Fixed price
€0
Cleanup & destruction
Fixed price
€ 500 000
Cleanup & destruction fees
Fixed price
€ 50 000
CAPEX
SHON
Capex / Sqm
-€ 6 164 550
Office
3 000 m2
€ 1 100
€ 3 300 000
Laboratories
2 500 m2
€ 750
€ 1 875 000
VRD
18 000 m2
€ 45
€ 810 000
3.00%
€ 179 550
Contingency
OPEX
-€ 1 204 874
Architect + study & technical (BET) + Administration (MOEX)
7.00%
+ acoustician
of total capex + contingency
€ 431 519
Control
0.50%
of total capex + contingency
€ 30 823
Security & Coordination
0.30%
of total capex + contingency
€ 18 494
Insurance
2.50%
of total capex + contingency
€ 154 114
Legal - except financing
Marketing
€ 50 000
€ 50 000
€0
€0
Management & Administration
4.00%
of total sales with VAT
€ 519 926
Broker
0.00%
of first year income
€0
Sales commission
0.00%
of sale price
€0
Date
30.06.2010
30.06.2010
30.06.2010
30.06.2010
30.06.2010
30.06.2010
30.06.2010
30.06.2010
30.06.2010
30.03.2010
Start date
30.09.2010
30.09.2010
30.09.2010
30.09.2010
End date
30.12.2012
30.12.2012
30.12.2012
30.12.2012
Start Date
30.03.2010
30.09.2010
30.09.2010
30.09.2010
30.03.2010
30.03.2010
30.03.2010
30.09.2010
30.09.2010
79
PHASE 2
Residual land value calculation
Satory - FRANCE
Projected revenues and IRR
EXIT
Rent / SQM
Surface utile
Office
€ 170
3 000 m2
Capital rate
7.40%
7.40%
Laboratories
€ 120
2 500 m2
Debt to equity :
65.00%
Loan Capital
E3M :
Margin :
€ 5 417 271
Interest
1.70%
3.50%
€ 376 544
Financing Fee
1.50%
of maximum debt amount
€ 81 259
Legal fee - financing
0.50%
of maximum debt amount
€ 27 086
Financing fee notary
€ 50 000
Fixed price
€ 10 868 011
€ 6 842 822
€ 4 025 189
Final payment
30.12.2012
30.12.2012
Tax for buyer
0.712%
0.712%
DEBT FINANCING
Loan Drawdown
Loan Repayment
Max loan amount :
0.67%
of after tax sales
Commitment fees
0.00%
of maximum debt amount
Millions
GFA
€ 87 088
€5
NAME :
€4
TOTAL COSTS (Acquisition + Capex + Opex) :
TOTAL REVENUES (Sales) :
Gross margin :
€3
Satory
€ 8 334 263
€ 10 868 011
30.4%
€2
€1
IRR Project (before tax) :
IRR Project (after tax) :
IRR Shareholders :
w/o leverage
IRR Project (before tax) :
IRR Project (after tax) :
IRR Shareholders :
Debt to equity ratio of 65.00%
w/o leverage
w/o leverage
21.0%
14.2%
13.3%
€0
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
-€1
-€2
Capital
Dividends
Boni liquidation
Shareholder Loan
Shareholder loan - interests
Debt to equity ratio of 65.00%
Debt to equity ratio of 65.00%
33.6%
22.6%
21.1%
80
PHASE 2
Risk Mitigation
Satory - FRANCE
Environmental risk
Existing study
No existing study for unexploded ordnance (UXO)
Investment
Advisor
assessment
Remote investigation by visual interpretation of available historical aerial
photographs or combination of geophysical and survey methods with modern
electromagnetic and magnetic detectors (magnetometer probes) providing
digital mapping of UXO contamination
 geotechnical data detection to better target subsequent excavations,
reducing the cost of digging on every metallic contact and speeding the
clearance process
Mitigation
Recent assessments of neighboring sites indicate approx. 25 UXO magnetic
anomalies per 1’000 sqm between 0 and 1 meter  preliminary UXO clearance
budget can be estimated at 550 K€
Next step : exploratory UXO assessment and budget taking into account specific
real estate project
81
PHASE 2
Risk Mitigation
Satory - FRANCE
Development/promotion risk
Investment
Advisor
assessment
ATEMI assessment : PPP project only
Mitigation
Development of MoveoLab facilities through long term contract with
INRETS – see PPP structuration
82
PHASE 2
Risk Mitigation
Satory - FRANCE
Political risk
Investment
Advisor
assessment
French government : Satory constitutes an « Opération d’intérêt
national (OIN) » along with the development of the SACLAY plateau.
Strong local support from Communauté d’Agglomération de SaintQuentin-en Yvelines, Chambre de Commerce et d’Industrie (CCI) de
Versailles, Conseil Général des Yvelines, Conseil Régional d’Ile-deFrance, City of Versailles…
But risk of a multiplicity of stakeholders
Mitigation
Step by step pragmatic approach
Strategic partnership with Caisse des Dépôts – Direction territoriale
Yvelines et Hauts-de-Seine
83
PHASE 2
Preliminary legal and financial structuring
Satory - FRANCE
PPP preliminary structuring
INRETS, holder of the temporary right of occupation (AOT) and acting as public contractor, launches a
bid for the structuring, designing, financing, UXO clearance and building of the Mov’eoLab facility.
Note : The legislation imposes standards of freedom of access, equal treatment of candidates and procedural
objectivity and requires a published request for proposals (RFP) but is less stringent/faster than the “contrat
de partenariat”
Ginkgo, through a dedicated SPV bids for the contract and is awarded the bid
INRETS transfers its AOT to the dedicated SPV
The dedicated SPV which contracts banking debt (70% by assumption) finances and manages the UXO
clearance and the design and construction of the building
The SPV transfers a « convention de mise à disposition » (CMD) of the building occupants (QUASPER,
LISIC, Geentech) versus the payment of rent over a long period (e.g. 30 years) guaranteed by
INRETS
84
ELIGIBILITY UNDER THE FUND’S STRATEGY
Satory - FRANCE
Eligibility under the Fund’s strategy ?
Yes
No
Project diversification
- Project size < 20% Fund’s total commitments
- 5 MEUR < Project size > 30 MEUR
- Number of invested projects < 12
Geographic Diversification
X
- France and Belgium in priority
- Total investment in one country < 60% Fund’s total commitments
X
Real estate project diversification
- One type of asset < 65% Fund’s total commitments
X
Project Internal Return Rate > 20%
X
85
PIPELINE
LEVEL 2 REJECTED PROJECT
NIVELLES (BELGIUM)
INVESTMENT APPRAISAL
86
OVERVIEW
Nivelles - BELGIUM
Industrial site located in Nivelles with proximity to future
RER train station to Brussels.
Type
Industrial site located in an periurban area
Owner
Industrial group (paper)
Location
Nivelles (Wallonia), Belgium
Size
24 ha
Pollution
Hydrocarbons, mineral oils, heavy metals and PCB’s
Sourcing
BroCap
Status
Bidding procedure abandonned
Project
Mixed redevelopment
87
PHASE 1
Attractiveness of the location
Nivelles - BELGIUM
Nivelles
Train Station
Located at the city border of
Nivelles (25’000 inhabitants),
some 32 km South of
Brussels
88
PHASE 1
Attractiveness of the location
Nivelles - BELGIUM
The property accommodates a mixture of industrial and
warehouse buildings as well as some agricultural and forestry
land.
Site surrounded by green land and residential uses.
89
PHASE 1
Attractiveness of the location
Nivelles - BELGIUM
Accessibility
Near to two national roads, one joining
Brussels, the other in the direction of
Braine l’Alleud-Waterloo
Close proximity to the new “RER” fast
train railway station which will link
Nivelles to Brussels due to open between
2012 and 2016
90
PHASE 1
Site investigation redevelopment potential
Nivelles - BELGIUM
Legal parameters
Bidding procedure with agressive timing for potential purchaser in order to be able to be short listed
and start the negotiation process :
Phase 1 – Due Diligence Access to electronic Data room
Phase 2 – Non binding letter of intent
Phase 3 – Shortlist
Phase 4 – Binding offer
Phase 5 – Negotiations - Signing
91
PHASE 1
Site investigation redevelopment potential
Nivelles - BELGIUM
Urbanistic parameters
The site is in zone of mixed
economic activities 18,5 ha of the
site is located in a “zone d’activité
économique et industrielle” under
the Sector Plan and 5,5 ha in a
“zone agricole et forestière”
An indicative “Master Plan” has
been made up by Urban Planner
and foresees in a mixed
development of housing, offices,
public services and retail on 18.8
ha.
92
PHASE 1
Site investigation Redevelopment potential
Nivelles - BELGIUM
Redevelopment objectives of the parties
Owner
Maximise the short term benefits - upfront cash for the sale of the land at the expense of the long term risks (has indicated its willingness to
shoulder a significant amount of environmental risk)
Encouraged by its real estate advisor King Sturge (probably paid based on
the sale price that has a large access to traditional real estate developers
and promoters and little understanding of remediation issues).
The Ginkgo Fund
Large scale site allowing a mixed redevelopment project not too far from
Brussels
Potentially attractive location for housing and residencies due to the
planned nearby RER station with direct access to the centre of Brussels
Important environmental liability that is partly or entirely retained by the
current owner; if not, a significant reduction in the acquisition price can
be negotiated
Support of the city of Nivelles for the preliminary draft masterplan and
interest for public engagements (school, library)
93
PHASE 1
Site investigation Redevelopment potential
Nivelles - BELGIUM
Real estate parameters
Spatial density
Probable unsufficient polarity to enable the development of 160 000 m2
(Master Plan). The site redevelopment in 1’400 new residential houses,
compared with a population of 25 000 people, is to ambitious  restrict project
density
Accessibility
Reasonable accessibility near to two national roads. Access to ringroad easy but
not immediate. Train station at 1km/10minutes walking distance. Nivelles City
center at 2km/20 walking distance  Not quite the city advantages nor the
bucolic surrounding
Attractiveness of
the trade area
Limited potential for commercial development : the N27 national road axis in
the direction of Waterloo-Brussels is underdevelopped but commercial units
need to be located on the axis itself.
94
PHASE 1
Site investigation Redevelopment potential
Nivelles - BELGIUM
Real estate parameters
State of the
local real estate
market
A recent business park exists at 400m « Portes de l'Europe » and is nearly
vacant.
Numerous recent residential developments near the site are under way,
e.g. a 800 residential unit project– of which 150 units are authorised
already - at 400m of the site (over a 15- to 20-year period).
Constructible land is available nearby around station.
95
PHASE 1
Preliminary redevelopment scenarios
Nivelles - BELGIUM
Environmental parameters
Various soil & groundwater investigation have been carried out in
2006, 2007 and 2008 by URS (industrial area – built zone) and TAUW
(industrial area – green land) on behalf of the owner.
A succession of uncoordinated technical reports states the presence
of hydrocarbons, mineral oils, heavy metals and PCB’s in the soil and
groundwater.
The URS document Evaluation des coûts d’assainissement indicates
a remediation budget range between €0,9 million (pumping,
treatment and containment of decantation muds) and €13,4 million
(total excavation and treatment)
TAUW concludes that the soil and groundwater quality at the green
land does not require any further investigation.
Owner estimates of remediation cost comprised between 185 K€
and 4,350 K€
96
PHASE 2
Residual land value calculation
Nivelles - BELGIUM
Arjo Wiggins
Residual value according to masterplan
Revenues
Price per unit
Amount
Total
12 500 €/p
300 p
Parking
5 000 €/p
0 p
Apartments
1 800 €/m² net
33 930 m²
€ 61 074 000
Houses
1 600 €/m² net
12 240 m²
€ 19 584 000
Underground parking
75 €/m² net
Gardens
€ 3 750 000
€0
€ 1 875 000
25 000
Offices
1 500 €/m² net
45 000 m²
€ 67 500 000
School
1 500 €/m² net
9 990 m²
€ 14 985 000
Prices do not include VAT
Prices do not include registry costs
Total
€ 168 768 000
Costs
Definition Amount
Balance
variant
Return € 28 128 000
€ 140 640 000
20%
€ 4 219 200
€ 136 420 800
2.50%
Brokerage fee
Building cost parking
€ 5 500 000
€ 130 920 800
550 €/m²
10000 m²
Building cost residential
€ 45 300 000
€ 85 620 800
1000 €/m²
45300 m²
Building cost apartments (pile foundation)
€ 7 200 000
€ 78 420 800
1200 €/m²
6000 m²
Building cost offices
€ 45 000 000
€ 33 420 800
900 €/m²
50000 m²
Building cost school
€ 9 990 000
€ 23 430 800
900 €/m²
11100 m²
Intrest on building cost
€ 3 090 000
€ 20 340 800
3% on building cost
13% on building cost
Fees € 13 214 900
€ 7 125 900
Remediation cf. Tauw (landfill)
€ 1 000 000
€ 6 125 900
Remediation cf. URS (factory)
€ 3 700 000
€ 2 425 900
Demolition
€ 1 500 000
€ 925 900
Projectcost
€ 71 259
€ 854 641
Utilities, infra,…
€ 500 000
€ 354 641
Residual value for acquisition
1% on project cost
forfait
€ 354 641
97
PHASE 2
Risk Mitigation
Nivelles - BELGIUM
Environmental risk
Existing study
Identifies soil and groundwater contamination with polycyclic aromatic
hydrocarbons, heavy mineral oils, benzene and PCB’s. Estimated remediation &
demolition budget is unconclusive, anywhere between € 2.5 and € 15 million
Investment
Advisor
assessment
URS and TAUW data and approach largely incomplete (nature of contaminants
on site, the pollution under the buildings and geotechnic data ) and risk model
largely theoretical/black box (Crap In Crap Out)
Additionnal worries include pollution spilling from the green area (TAUW) zone
to neigboring zones and an unknown degree of contamination below 10m
(unsufficient soil boring).
Mitigation
Remediation budget is currently unknown and needs to take into account the
projected real estate project and requires much more exhaustive soil and
groundwater data and studies
Investment Advisor remedial costs rough estimates are: € 3 million for the built
zone and €4-5 million for green land : NO IDENTIFIED ENVIRONMENTAL
MITIGATION APPROACH  DEAL REJECTED
98
PHASE 2
Risk Mitigation
Nivelles - BELGIUM
Development/promotion risk
Investment
Advisor
assessment
Given the state of the local real estate market (other developments under
completion nearby, vacant offices, …) and even taking into account a lower
density project, development risk appears important in the short-mid
term.
Mitigation
NO IDENTIFIED REAL ESTATE MITIGATION APPROACH  DEAL
REJECTED
99
PHASE 3
Due diligence
Nivelles - BELGIUM
Supporting documents
74 documents have been consulted in the electronic data room : general, environmental,
legal, real estate.
100
PHASE 3
Financial and legal structuring
Nivelles - BELGIUM
Deal summary
Original non-binding offer submitted
Modification of the scope of the transaction including the sale of an additional warehouse
bordering the site
No modified non-binding offer submited
Short-listed as potential purchaser with approval to contact authorities and urban planner
Ginkgo declined to submit binding offer for year-end deadline
Because of environmental uncertainties, bidding procedure still pending today
Walloon government decided to order an additional environmental study from SARSI
(société d'assainissement et de rénovation des sites indutriels)
Willingness from the Region to invest in the remediation but only if potential benefits, i.e.
PPP approach
101
Nous n’héritons pas de la terre de nos ancêtres,
nous l’empruntons à nos enfants
Antoine de Saint Exupéry
102