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To everything there is a season: Infrastructure assets evolve over time, and the risks can fluctuate between brownfield and greenfield throughout their lifecycles
If everything went according to plan, investors in Heathrow Airport Holdings Ltd., which owns and operates London’s Heathrow Airport as well as a number of other U.K. airports, would probably have expected the assets to exhibit characteristics typically associated with brownfield investments: lower risk, inflation protection and a large share of return generated from predictable cash income to help meet outgoing payment obligations.
But things do not always go to plan. Over the lifecycle of a long-term brownfield lease, such as the 99-year lease for Port Kembla and Port Botany in Australia, expansions may be required, regulations can change, and what appeared to be a stable, income-producing asset may suddenly require significant capital injection before desired returns can be met, essentially putting the asset on the front end of the J-curve just like a typical greenfield investment. This issue could be