Philip Services Corp. and Cushman & Wakefield form alliance for brownfield site development

Real Estate Weekly, Oct 22, 1997

Brown field sites are abandoned parcels of contaminated industrial property. In the United States, the General Accounting Office (GAO) estimates the number of brownfield sites to be between 130,000 and 400,000. With a combined resource base of more than 20,000 employees, 600 offices and $3 billion in annual revenue capacity, this new strategic alliance now makes Philip, Cushman & Wakefield and Royal LePage industry leaders in North American brownfield redevelopment.

Brownfield sites show up as liabilities on the balance sheets of the vast majority of Fortune 500 industrial firms. The alliance is focused on returning these liabilities to productive assets. Philip will guarantee firm demolition and remediation costs and backs up its guarantees with environmental insurance provided by American International Group (AIG), the largest environmental insurance carrier in the world.

Based on the strength of Philip's guarantees, the client can remove the liabilities from their balance sheet. Cushman & Wakefield and Royal LePage provide property valuation and disposition services; "highest and best use" studies; project financing; tax and other advisory services.

"The relationship among Philip, C&W and Royal LePage allows us to provide integrated decommissioning, remediation, property management and realty services to our combined customer base across North America," said Allen Fracassi, president and CEO of Philip Services. "We, in turn, are positioned to benefit from significant business opportunities that are the result of a push by industry and government to turn these contaminated properties into an asset."

"As a result of Royal LePage's alliance with Philip and C&W, the opportunity to redevelop brown field sites in the Canadian marketplace has become immense," said Colum Bastable, president and CEO of Royal LePage. "Our clients will benefit from a streamlined and superior redevelopment service achieved through the combined expertise created by this alliance."

In the United States, a "window of opportunity" has been created by a federal tax incentive program for returning brownfield sites to productive use. The program expires December 21, 2000. Under this program, American municipalities and economic development authorities are offering substantial incentives to developers to restore abandoned sites.

According to the GAO, a $1.5 billion tax incentive program is expected to stimulate $6 billion in private investment and return an estimated 14,000 brownfields to productive use. The alliance will provide the necessary resources and expertise to assist clients in taking advantage of this financial incentive.