Advisory Example
Option Sale related to Power Generation Assets
PROJECT:
85MW gas-fired cogeneration peaking unit and related steam host operations. Original Cost $65 million. Facility was a FERC approved Qualifying Facility. The facility had problems with generation efficiency and faced questions about long-term viability.
WORK SCOPE:
Prepared evaluation of client’s position relative to the Lease and sub-Lease. Identified specific QF and engineering concerns. Led negotiations with IPP and power marketers interested in acquiring only the power generation assets. Managed process to prepare QF steam host operations for auction.
RESULTS:
Completed option sale for client that eliminated book residual, provided for immediate book income enhancement, eliminated risk from negative impacts related to QF status, achieved lender consents at no cost to client, and maintained client’s long-term value from the steam host operations.
CONCLUSION:
Retained by client to implement renegotiated agreements, monitor facility operations, and report regularly on the credit of the Lease guarantor. IMA LLC represented the Owner at the Option (purchase) exercise resulting in the sale of the asset. IMA LLC works for this client on other assets in its current portfolio.
Acquisitions of Excess Land / “Brownfield” Sites
TARGET:
Former industrial properties either with, or without, environmental issues. In a “brownfield” sale, the Seller is required to guarantee a level of remediation that will comply with requirements of the state EPA (or other environmental regulatory entities) to achieve a No Further Action (“NFA”) status for the property.
WORK SCOPE:
The investment criteria requires the land to be appropriate for specific “re-purposing” or re-development opportunities. Opportunities need to be compelling and will usually include government incentives. Examples of re-purposing include: ground mount solar PV; re-development using Economic Development Zone classification; New Market Tax Credit Allocatees; etc.
RESULTS:
IMA LLC currently pursuing opportunities for both Sellers and Buyers.
CONCLUSION:
First property has been acquired. IMA LLC is now helping to implement a 20-year power sale contract with the Tennessee Valley Authority (the “TVA”) for a commercial PV solar project.
Work-Out of Early Stage Development
PROJECT:
Client had funded a Developer to renovate and restore 16 historic mill buildings (Philadelphia, Pennsylvania). Original goal was a mixed-use development.
WORK SCOPE:
Developer failed to perform and initiated steps to file for Chapter 11 protection. When IMA LLC stepped in, the client faced a total loss of its $17.5 million equity investment within 90 days. IMA LLC recruited and led a team of engineers, environmental professionals, redevelopment advisors, historic tax consultants, lawyers, and local experts (including real estate tax adjusters). IMA LLC developed alternatives for the Owner. We also led negotiations with holders of first and second mortgage notes, and coordinated the lawsuit to collect against the Developer’s guarantees.
RESULTS:
IMA LLC managed all recovery efforts for client. Recoveries included: (i) $8.5 million in cash from the litigation against the Developer; (ii) $5.5 million in historic rehabilitation credits from the NPS; (iii) eliminating a $16 million first mortgage; (iv) reducing claims from contractors and vendors and settling claims. Property was repositioned and sold for a gain by our client.
CONCLUSION:
By rapidly evaluating the principal issues and implementing a decisive strategic response, IMA LLC helped our client maximize its recovery in the midst of a cyclical downturn in the market for speculative real estate.
Opportunities with “Orphaned” Assets
PROJECT:
Arrange dispositions, as well as acquisitions, of orphaned assets from investors’ portfolios. Examples include the purchase of 7 operating billboard licenses and 5 acres of excess commercial land. The billboard and land assets were legacy assets related to a much larger acquisition (2006) of a competitor by our client. These assets had nothing to do with the primary business of either our client or the acquired company. These assets were considered “orphans”, and a new opportunity fund eventually purchased the orphaned assets.
WORK SCOPE:
We analyzed opportunities to sell or donate the commercial parcels. Managed the renewals and license extensions for the billboards.
RESULTS:
In less than 36 months 100% of capital invested in land and billboards was recovered. Going forward, the new owner expects unlevered cash flow will provide significant IRR during a projected 10-year hold period.
CONCLUSION:
IMA LLC is pursuing opportunities to advise other prospective Buyers or Sellers.