UNIVERSITY OF WISCONSIN – MADISON – P3 TRANSACTION ANALYSIS AND DEMAND ASSESSMENT FOR STUDENT HOUSING

Madison, Wisconsin

Wachalski Advisory (“WA”) provided financial analysis and market demand services related to a potential on-campus student housing project. WA’s scope of work consisted of preliminary facility programming and detailed financial modeling to understand how various transaction / ownership models would impact the project quality and rental rates. Three approaches were analyzed in detailed financial pro-formas:

• Foundation model,
• Equity model, and
• Service concession model.

WA concluded that each of these models is feasible but the project quality, expressed in the construction cost per square foot, and the required rental rates may vary.

Following the financial review, WA performed a preliminary market analysis to test the contemplated project concept (unit types and associated rental rates) with the target market. The analysis consisted of student focus groups and student survey. Based on the data obtained in the survey, WA developed demand analysis to quantify demand for various residential units at specific price points.


UNIVERSITY OF NORTH DAKOTA – WILKERSON COMPLEX MASTER PLAN AND FINANCIAL ANALYSIS

Grand Forks, North Dakota

Image by KWK Architects

Wachalski Advisory (“WA”) collaborated with KWK Architects and ICON Architectural Group on a comprehensive redevelopment plan of the Wilkerson Residential Complex. WA’s involvement included assistance in the program development, detailed financial modeling, and peer benchmarking.

Wilkerson Complex consists of approximately 1,460 beds in five residential structures build in 1960’s. The consulting team prepared a detailed plan to renovate the buildings to create a more attractive environment for the residents. The renovations included upgrades to all building systems and remodeling of residential units and community spaces

Three project schemes were presented at the conclusion of the study with varying degrees of renovation versus proposed new construction. The financial pro forma prepared by WA demonstrated how the contemplated projects could be implemented in phases. In addition, it identified required rental rate adjustments and auxiliary revenue sources necessary to make the projects feasible. The rental rates were compared with price points at peer institutions in a detailed benchmarking analysis.


MISSOURI STATE UNIVERSITY – STUDENT HOUSING PLAN: FACILITY ASSESSMENT AND FINANCIAL MODELING

Springfield, Missouri

Wachalski Advisory (“WA”), in collaboration with TreanorHL, prepared a detailed plan for comprehensive renovations of the student housing stock at Missouri State University. The scope of work consisted of two major elements: review of the building physical condition and development of a financial strategy to address the key deferred maintenance issues. WA focused its efforts on the following items:

1) Review of the existing housing stock and a new 402-bed project coming on line in the fall of 2020.

2) Detailed review of the Residence Life’s annual operating budget to understand all relevant revenues, expenses, debt service payments, and transfers.

3) Development of 15-year cash flow projections, based on the annual operating budget, to test a potential debt capacity that may be used to fund the renovation projects.

4) Coordination of the efforts and the financial model with TreanorHL and the MSU administration.

At the conclusion of the project, WA recommended two solutions for further consideration. Those include funding of the deferred maintenance issues through reserves to which housing makes annual contributions or generating sufficient debt capacity to pay for the identified projects with bond proceeds. While the first option would allow for a series of smaller projects, the second approach could potentially solve a significant number of infrastructure problems over a shorter period of time.


UNIVERSITY OF MISSOURI-SAINT LOUIS – STUDENT HOUSING MASTER PLAN

St. Louis, Missouri

Wachalski Advisory (“WA”) was retained by UMSL to provide advisory services related to potential redevelopments of the on-campus housing. In the context of UMSL’s enrollment figures, student demand, and physical condition of the buildings, WA developed a comprehensive strategy consisting of multiple project options.

WA’s scope of work included strategic analysis, facility tours, student focus groups, demographic review, facility condition review, project definition, and detailed financial modeling. This approach formed a market-driven background in which projects were defined and, later, tested for financial feasibility. In addition to modeling of new projects, WA performed a detailed review of the exiting budget and allocation of costs and revenues to all residential buildings to understand their cash individual cash flows.

A total of seven potential new initiatives were defined ranging from a limited building renovation through new construction of an apartment complex. Ultimately, the selection and implementation of projects will depend on future student enrollment and UMSL’s financial expectations related to its housing program.


EASTERN FLORIDA STATE COLLEGE – STUDENT HOUSING FEASIBILITY ANALYSIS

Melbourne, Florida

Image: Eastern Florida State College

WA’s scope of work included strategic analysis, facility tours, student focus groups, demographic review, facility condition review, project definition, and detailed financial modeling. This approach formed a market-driven background in which projects were defined and, later, tested for financial feasibility. In addition to modeling of new projects, WA performed a detailed review of the exiting budget and allocation of costs and revenues to all residential buildings to understand their cash individual cash flows.

WA provided real estate advisory services to assist Eastern Florida State College in analyzing the feasibility of its first on-campus student residential facility.

WA’s scope of work consisted of detailed financial modeling to understand how the project scale may produce economies of scale, both on the capital and operational sides, to lower the rental rate structure required for feasibility.

Market demand was determined based on student feedback generated in focus groups and an electronic survey. WA also reviewed the private, off-campus market offerings and residential programs at other community colleges in Florida.

WA concluded that the first phase of the campus residential project should not exceed 300 beds. Four-bedroom / two-bathroom unit was recommended as the core of the program because the unit offered the largest value at an acceptable price point. The project is currently under development with a CM-at-Risk delivery method and is projected to open in the fall of 2020.


DAKOTA STATE UNIVERSITY – STUDENT HOUSING MASTER PLAN & PUBLIC-PRIVATE PARTNERSHIP (P3) TRANSACTION ANALYSIS

Madison, South Dakota

WA provided advisory services to Dakota State University in the process of master planning for the redevelopment of on-campus student housing. Due to growing enrollment and shortages of private-sector housing in the community, DSU wanted to address the residential deficiencies with respect to the quantity of beds and quality of the existing stock.

Image by KWK Architects

WA vetted various transaction types as DSU expressed interest in pursuing a public-private partnership. The analysis proved that an on-balance sheet transaction would be optimal in order to achieve the desired quality of construction and price points. Other deal structures analyzed included an equity model and a foundation approach.

WA also provided market analysis to assess student demand for on-campus living and reconcile the demand with supply, both on and off campus. I collaboration with KWK Architects, WA proposed improvements to existing residence halls and an addition of approximately 200 new beds. Once approved by the Board of Regents, the first phase of the master plan (a 200-bed addition) will be ready for the fall 2020 occupancy.


UNIVERSITY OF UTAH – SOUTH CAMPUS HOUSING/DINING ADVISORY SERVICES

Salt Lake City, Utah

WA provided advisory services to assist the University of Utah in the development of a new undergraduate complex consisting of approximately 950 beds and a student cafeteria. Due to rapidly growing freshman enrollment, the University decided to construct a new living-learning facility to accommodate lower-classman demand for on-campus housing.

WA’s scope of work consisted of initial programming of both the housing and the dining components. Once the program was established, based on the market demand, WA developed a capital budget in coordination with a local contractor. The financial modeling was structured as value-for-money analysis to determine the best transaction structure for the project from the cash flow and risk transfer perspectives.

The University, ultimately, decided on an on-balance sheet transaction and proceeded with schematic design. In that phase of the project, WA provided continuing financial modeling for the projects as well as for the entire existing housing system to understand the impact of new beds on the financial health of the auxiliary operations. The project is scheduled to open in 2020.

Images by MHTN Architects / TreanorHL

METROPOLITAN COMMUNITY COLLEGE, OMAHA – AUXILIARY SERVICES REVIEW

Omaha, Nebraska

WA was engaged by MCC to provide a review of the auxiliary services on all its campuses and centers. The scope of the review included an assessment of current offerings in food service, housing, childcare, healthcare, transportation, and technology versus the student demand. The issues of food and housing insecurity were also analyzed in the context of the MCC’s student demographic profile.

WA’s scope of work included strategic review with MCC’s key administrators, student focus groups, and a quantitative survey. The findings and recommendations were presented to MCC’s Board of Governors in December of 2017 for further consideration.


UNIVERSITY OF SAINT THOMAS – STUDENT HOUSING MASTER PLAN

St. Paul, Minnesota

Image by Mackey Mitchell Architects

WA provided planning and advisory services to University of Saint Thomas as part of master planning for student housing on the St. Paul, Minnesota campus. Upon completion of a campus-wide master plan, the University hired a team of WA and Mackey Mitchell Architects to develop a detailed strategy for its residence halls.

WA’s scope of work consisted of strategic goal development, review of existing facilities and operations, peer benchmarking, student focus groups, student survey, and an on-campus housing demand assessment. Physical planning included development of renovation concepts and site capacity testing for potential new projects.

The master plan defined a number of projects, both renovation and new construction, to address the main objectives: adding more sophomore housing on campus, improving the existing freshmen housing stock, and, potentially, capturing more junior and seniors. The master plan recommendations were presented to the Board of Trustees in May of 2018.


UNIVERSITY OF UTAH – WEST FINE ARTS BUILDING – FINANCIAL MODELING

Salt Lake City, Utah

Image by FFKR Architects

WA was retained by the University of Utah to develop a financial model for a contemplated West Fine Arts facility consisting of a performance theater space, parking, and housing. WA’s scope of work included review of design concepts, development of revenue and cost assumptions based on market data, and preparation of multiple pro forma cash flow scenarios.

The cash flow scenarios address various programmatic options for the building based on the theater size, quantity of parking spaces, and the size of the residential program. The pro forma reconciled the net operating income with the capital cost expressed as a combination of fundraising proceeds and debt service. The project is currently under evaluation by the University’s administration.


UNIVERSITY OF SAINT MARY – PRELIMINARY HOUSING ASSESSMENT

Leavenworth, Kansas

The cash flow scenarios address various programmatic options for the building based on the theater size, quantity of parking spaces, and the size of the residential program. The pro forma reconciled the net operating income with the capital cost expressed as a combination of fundraising proceeds and debt service. The project is currently under evaluation by the University’s administration.


KANSAS CITY UNIVERSITY OF MEDICINE AND BIOSCIENCES – JOPLIN CAMPUS – AUXILIARY SERVICES REVIEW AND HOUSING DEMAND ANALYSIS

Kansas City, Missouri / Joplin, Missouri

The cash flow scenarios address various programmatic options for the building based on the theater size, quantity of parking spaces, and the size of the residential program. The pro forma reconciled the net operating income with the capital cost expressed as a combination of fundraising proceeds and debt service. The project is currently under evaluation by the University’s administration.

KCU engaged WA to review its auxiliary services on a new campus in Joplin, MO. At the end of the first year of operations, the University wanted to assess student satisfaction with the new campus, define potential improvements, and estimate demand for student housing.

WA’s scope of work included strategic goal definition, demographic review, student focus groups, an electronic survey, housing demand calculations, Joplin housing market review, and financial modeling. The financial model was structured as value-for-money analysis to test various transaction structures, an on-balance-sheet approach versus public-private partnerships.

The analysis results and recommendations with respect to student fitness / recreation, food service, study space and housing were presented in April of 2018. WA is currently embarking on the second phase of the assignment to address student housing in more detail.