1. MAXIMIZE THE VALUE OF THE REAL ESTATE ASSETS OF HIGHER EDUCATION INSTITUTIONS BRAILSFORD & DUNLAVEY Carole Wedge, President Shepley Bulfinch Richardson & Abbott Thomas Kearns, Principal Shepley Bulfinch Richardson & Abbott Wallace Mlyniec, Former Associate Dean Georgetown University Law School Jeff Turner, Senior Vice President Brailsford & Dunlavey John Augustine, Managing Director Lehman Brothers Georgetown Law Shepley BulfinchLEHMNABROTHER S

2. Carole

3. Valuing Assets: The Campus Fresh Students Every Year Understanding Options: Real Estate Funding New Models Linking Strategy: Operating and Capital Budgets Payback / Lifecycle Evaluating Delay: Escalation Recruitment Opportunities Missed

4. Initiatives that may impact space needs…capital planning… and dollars. CAPITAL PROJECTS IN CONTEXT Strategic Plan Curriculum Plan Growth Technology Innovation Administration Change Sustainability Commitments

5. QUESTIONS INSTITUTIONS ARE ASKING How can we accomplish this? (Show me the $$$$) How do we garner support? (Show me the $$$$) How will this make us competitive? (Why is this important?) How will this improve our recruitment? (Why is this important?) Can we afford this? (What are the operating costs?)

6. TRENDS IN HIGHER EDUCATION Institution as Economic Engine Transformational Student Experience Changes in Teaching and Learning Changes in Living Environments

7. Wally

8. GEORGETOWN LAW SCHOOL FOUNDED IN 1875 2006 GULC

9. DOWNTOWN D.C.

10. GEORGETOWN UNIVERSITY LAW CENTER CAMPUS

11. BERNARD McDONOUGH HALL EDWARD DURRELL STONE, ARCHITECT

12. EDWARD BENNETT WILLIAMS LIBRARY HARTMAN & COX, ARCHITECT

13. BERNARD AND SARAH GEWIRZ BUILDING HARTMAN & COX, ARCHITECT

14. BERNARD MCDONOUGH HALL EAST WING HARTMAN & COX, ARCHITECT

15. GEORGETOWN UNIVERSITY LAW CENTER CAMPUS

16. ERIC HOTUNG INTERNATIONAL LAW BUILDING SHEPLEY BULFINCH, ARCHITECT

17. GEORGETOWN SPORT AND FITNESS CENTER SHEPLEY BULFINCH, ARCHITECT

18. THE FUTURE

19. Tom

20. INSTITUTION AS ECONOMIC ENGINE

28. CHANGING LEARNING STYLES Problem – Traditional classrooms have key restrictions of limited resource availability and physical isolation.

29. CHANGING LEARNING STYLES

30. Class with Remote Guest Speaker – Imported into the classroom via video with the session including guest captured in streaming format and shared with faculty and students doing interdisciplinary work in related fields. CHANGING LEARNING STYLES

31. Goal - Establish a portfolio of flexible and technologically-enhanced formal and informal learning spaces in support of socially-enabled inquiry and discovery. CHANGING LEARNING STYLES

32. Media Creation – iPods, iTunes, iPhoto, eBooks, iLectures, videophones, BluRay disks for stereoscopic video, Lectopia, Symposia, Blackboard. CHANGING LEARNING STYLES

34. CASE STUDY: XAVIER UNIVERSITY

35. CASE STUDY: BUCKNELL UNIVERSITY

37. Jeff

38. TRENDS TOWARDS ALTERNATIVE FINANCING & PARTNERSHIPS Limited State Financial Support Speed of Delivery & Execution Increasing Construction Costs Allow for greatest expertise Community Partnerships Construction Costs Owner's Budget 15-25% budget shortfall

39. TRENDS TOWARDS ALTERNATIVE FINANCING & PARTNERSHIPS

40. Less defined campus edges Off-campus university bookstores make for strong anchors College towns potentially incubate new business Student population accounts for 20% of the market* Successful college towns consists of high-end national (30%) as well as local merchants (70%)* *Source: Ayers Saint Gross TRENDS TOWARDS ALTERNATIVE FINANCING & PARTNERSHIPS

41. Initial RFP for design services Revised RFP Issued for full development services including: Health/Wellness Center Student Housing Campus/state limited debt capacity Developer led process 120,000 gsf Wellness Center 780 beds of housing Courtesy of Capstone, D/C, & H&C MARSHALL UNIVERSITY – WELLNESS CENTER & STUDENT HOUSING

42. Limited Recreational Facilities in Prince William County Tri-partite Agreement with George Mason U, city of Manassas, and Prince William County Facility covers operating costs plus a portion of debt service Remaining debt service split based on usage Over 600k users a year Over 5,000 members, 7,000 memberships Discussing an expansion New Performing Arts Center looking at similar operating model GEORGE MASON UNIVERSITY – FREEDOM CENTER

43. BUCKNELL UNIVERSITY - LEWISBURG, PA CURRENT SITUATION Considerable loss of regional manufacturing jobs Suburban development causing decline of boroughs as commercial hubs Changing demographics, graying population Fragile downtown Lewisburg with independent retail Rising threats to a Heartland Region core community

44. Increasing competition for high school graduates Increasingly sophisticated student and faculty/staff quality of life expectations Universities expected to look beyond campus TOWN – GOWN DYNAMICS Courting of the creative class Diversity of sports, cultural, and learning activities Building a creative ecosystem to attract 21 st century jobs and workers First Initiative: Neighborhood Improvement Projects

45. Main Street & Elm Street Grants Streetscape and Façade Improvements (1) 7 th Street Reconstruction (2) CURRENT NEIGHBORHOOD PROJECTS Bucknell Second Initiative: Magnifying Neighborhood Improvements 2 Market Street 1

46. UNIVERSITY VILLAGE OBJECTIVES Strengthen Recruitment Enhance the Neighborhood Create Market Street Link Define a University Gateway Improve Community Relations Clarify Faculty / Student Housing Options Complement existing retail on Market Street

47. LEWISBURG NEIGHBORHOOD STUDY AREA Market Street Strawberry Alley St. George Hawn Alley

48. MARKET ANALYSIS CONTEXT Study Area 82 Owners 181 Parcels 36 Acres Primary Area 53 Owners 126 Parcels 29 Acres

49. PROCESS Community MarketCampus Market Preliminary Program Project Concept Implementation Strategy Market Feasibility Financial Feasibility Financing Mechanism, Development Structure Demand and Supply Analysis Pro Forma, Project Uses Project Sources, Project Participants

50. OUTCOMES For-Sale Housing Rental Housing Retail Conference Space Hotel Office Space Community Market Campus Market Neighborhood Real Estate Product Drivers Dem and Neut ral High Dem and Dem and Neut ral High Dem and

51. Park Point at RIT Project Drivers Create a new front door to campus. Increase the sense of community by developing a college town on campus. Generate revenue for the campus. Project Statistics $85 Million Mixed Use Development 67 Acres 67,000 GLA of Retail (100% leased) 300 Student Apartments (920 Beds) (Over 75% leased) Ownership / Management Structure Ground Lease with developer (Wilmorite) United Realty Management Company manages the housing. CASE STUDY ROCHESTER INSTITUTE OF TECHNOLOGY

52. Park Point at RIT Retail Concepts 40k GSF RIT Book Store (B&N) Clothing Salon/Spa Convenience Cellular Fitness Center Restaurant Concepts Sports Bar Pizza Coffee Asian / Sushi Lessons Learned Wetlands Issue Created Significant Delays College wanted more retail/apparel but no demand

53. John

54. PRIVATIZATION PROCESS 2.Establish Project Objectives. 3. Create the Project Vision. 4.Complete Development/ Market Demand Analysis. 5. Develop Land, Building and Infrastructure Program. 6.Complete Design. 7.Prepare Total Development Analysis. 1. Conceptualize Project. 13. Choose Developer. 14. Negotiate Development Agreement. 15. Obtain Equity and Debt. 16.Start Construction. 12. Develop Public/Private Financing Structure. 8. Complete Financial Analysis. 8. Complete Financial Analysis. 10. Develop Alternative Public/Private Finance Plans. 11. Develop Alternative Ownership, Investment, Development and Operation Scenarios. 9.Prepare Development Phasing Plan. 9.Prepare Development Phasing Plan. Source: Stainback and Associates

55. PRIVITAZATION – FINANCING OPTIONS FOR NEW PROJECTS There is a broad continuum of financing options: There is a broad continuum of financing options: Tax-exempt financing can be used for a significant portion of most structures. Publicly Owned and Financed with Tax-Exempt Bonds (Interest Rate: 5.5% - 6%) Privately Owned and Financed with Equity Contributions (Rate of Return: 20% -30%) Between these two extremes, a variety of structures utilizing tax-exempt debt, taxable debt and equity funding are possible.

56. THERE ARE TWO TYPES OF NON-RECOURSE DEBT: ON-CREDIT AND OFF-CREDIT On-Credit Non-Recourse Debt Secured only by a limited, particular stream of revenues or assets, usually those of the financed project, rather than by a general revenue pledge. Off-Credit True Non-Recourse Debt In addition to the limited security described above, there is a transfer of risk (legal and perceived or real vested interest) away from the University or Affiliated Organization to some other creditworthy entity.

57. ADVANTAGES AND DISADVANTAGES – THE GOOD NEWS From the Perspective of the Public or Non-Profit Partner Reduces ownership and development risks. Reduces primary public or non-profit partner capital investment. Monetizes excess and underutilized assets. May utilize private partner expertise and creativity. Implementation schedule may be accelerated.

58. From the Perspective of the Private or For-Profit Partner Often public/private developments are high profile projects. Jointly control a college or university-owned real estate asset available for the first time. If needed, primary and secondary college or university partner provides capital and/or non-capital investments. Reduces development cost and enhances cash flow. May utilize private partner expertise and creativity. Approval process may be accelerated. ADVANTAGES AND DISADVANTAGES – THE GOOD NEWS

59. ADVANTAGES AND DISADVANTAGES – THE BAD NEWS From the Perspective of the Public or Non-Profit Partner Reduces control over design, delivery, and operation. Reliance on a virtually unknown private entity. Deal structure may be perceived as not a fair and reasonable sharing of costs, risks, responsibilities and economic return. Private partner has the right to sell project to an unknown third party. Economic return is primarily contingent on performance of private partner.

60. From the Perspective of the Private or For-Profit Partner Substantial cost in time and capital risk. Often public or non-profit partner is not prepared to structure, negotiate and implement. Development site is either not under control, has environmental problems and/or is not entitled. Public or non-profit partners expectations are not in line with the capital markets. Public or non-profit partner is subject to political change. ADVANTAGES AND DISADVANTAGES – THE BAD NEWS

61. PARTNERSHIPS CAN BE CUSTOMIZED TO MEET THE OBJECTIVES OF PARTNERS Variables to Consider and to Evaluate Level of participation in structuring, implementing, and managing the project. Financing sources. Financing techniques. Financing, design, construction, and operational responsibilities. Finance structure. Accounting Factors: FASB vs. GASB Distribution of cash flow among the public and private entities. Ownership position. Design, construction, and operational risks. Level of control. Implementation schedule. Legal interrelationships among the project entities.