When is Infrastructure Real Estate?
Universities looking to enter into P3 transactions with private partners to monetize existing facilities or as part of a strategy to finance capital improvement plans may be surprised to learn, on occasion, that their proposals don’t qualify as infrastructure from their investors’ perspectives.
Typical university P3 proposals seek to “unlock” private capital and relevant expertise to build or improve essential but non-core facilities on their campuses, including utility or power systems, energy efficiency refurbishments, dormitories, lab and office space. However, the difference between attracting a real estate or infrastructure private partner depends on the essentiality of the asset, term of a concession agreement, level of market risk allocated to the private partner and alignment of financial incentives and responsibilities between the university and the private partner.
As they evaluate their financing requirements, universities may be able to use infrastructure investors as an effective partner for their capital planning and strategic goals with an acceptable partnership structure in place.
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