Co-venture will revitalize 'brownfield' sites

Real Estate Weekly, May 29, 1996

The new company, Dames & Moore/-Brookhill, L.L.C., combines the expertise of Dames & Moore, a leading international environmental engineering and construction management firm listed on the New York Stock Exchange, and The Brookhill Group, one of the nation's leading real estate turnaround specialists. Each owns a 50 percent interest in the new venture through a subsidiary.

The new company is targeting the so-called "brownfields" market, consisting of properties, both existing buildings and land, affected by environmental contamination. Some two dozen states have taken measures to authorize and encourage the clean-up of brownfield sites, which are estimated to number in the hundreds of thousands nationwide.

Dames & Moore/Brookhill has $200 million of debt and equity with which to acquire properties across the country, primarily in the retailing, commercial and industrial sectors, according to a joint statement by Ronald B. Bruder, founder and president of The Brookhill Group, and Alan P. Krusi, president of Dames & Moore Ventures, the subsidiary that holds Dames & Moore's interest in the new company.

Dames & Moore/Brookhill is targeting such sources as under-used or surplus-property inventories of major companies, equity and mortgage portfolios of large financial institutions, and properties controlled by government agencies.

Bruder, who serves as chairman of the board of managers of Dames & Moore/-Brookhill, said that "by putting the skills of Dames & Moore and Brookhill together, we've created a uniquely qualified enterprise to return environmentally damaged property to maximum use and value. No other venture of this kind combines decades of experience in both the environmental and real estate disciplines with the financial strength to offer owners a variety of creative solutions to contamination problems."

Relieving owners of liability

Krusi emphasizes "two enormous advantages we can bring to sellers. First, we have the financial ability to indemnify them against future liability. A key problem for sellers of contaminated property has been the fact that they relinquish control upon the sale, but the potential liability for past contamination remains with them forever. We can take the seller out of danger once and for all."

Second, he explains, sellers "can become beneficiaries of our ability to restore value. Rather than disposing of a contaminated property at a very large discount, as is often required, sellers may elect to participate with us to recover a portion of the lost value, either through remediation or redevelopment or both.

"These are vital considerations, not only for owner/developers but for lenders, including banks with REO, "he said.

Dames & Moore, based in Los Angeles, is a worldwide provider of comprehensive engineering, environmental, and construction management services. Established in 1938, the firm has 151 offices in 23 countries, with a staff of nearly 5,000 professional and support personnel. Dames & Moore has served more than 31,000 clients throughout its history.

Bruder founded The Brookhill Group, a New York City owner/operator, in 1977. The company has acquired properties in 21 states, with an aggregate acquisition value of more than $500 million. In addition to turning around its own acquisitions, the company has been engaged by the Federal Deposit Insurance Corporation and many major banks and thrift institutions to assist in restoring value to distressed real estate.