Nearly three years after a public private partnership (PPP; P3) was first proposed for the Nicholson Gateway project, the Louisiana State University (LSU) Property Foundation has shortlisted two contenders to develop the facility.
The two firms selected are American Campus Communities and RISE Real Estate, according to Rob Stuart, Chair of the Nicholson Gateway Development Project Committee.
The American Campus Communities project team is comprised of Coleman Partners Architects, Lincoln Builders, Saurage Rotenberg Commercial Real Estate, Provident Resources, Shreve Land Constructors, Hanbury Evans Wright Vlattas and RBC Capital Markets.
On the proposed RISE Real Estate team are Remson Haley Herpin, Provident Resources Group, The Lemoine Company, Stirling Properties, Niles Bolton, Stantac and RBC Capital Markets.
The selection follows a request for qualifications (RFQ) period that ran from July 24 to August 21 in which 10 submissions were received, and a request for proposals period that saw five submissions between September 25 and November 6.
Under the current project timeline, the LSU foundation plans to announce approvals by spring 2016.
The project is aimed at transforming a large undeveloped tract of land into “an exciting new gateway district” by creating 1,260 apartment-style beds and 410 suite-style beds with associated residential support spaces. These include lounges, study areas, community gathering places and retail food services, according to an LSU Property Foundation statement. It is also expected to comprise 30,000 to 50,000 square feet of new retail space.
According to the project master plan developed in 2012 with help from AECOM, Grace & Herbert Architects, Brailsford & Dunlavey, and Walker Parking, projected development costs range between $137 million and $198 million.
Using three separate development models, estimated cumulative year 10 net operating incomes (NOI) for the project range between $81.4 million and $98.3 million. Cumulative year 10 NOI after debt service to the university, with debt service interest of 5 percent, range between just under $4 million and just under $11 billion.
Year 10 return on costs using the 5 percent interest peg are estimated between 46.3 percent and 56.6 percent, and year 10 return on equity is estimated between 7.5 percent and 27.9 percent.
With interest on debt service set at 6 percent, the bottom-end of the NOI range drops out to a loss of $3.8 million, with equity return of -7.1 percent, and the top-end falls to $4.2 million with return on equity of 12 percent.