UNIVERSITY OF ILLINOIS AT CHICAGO
South Campus Development Advisory Services

S. B. Friedman & Company has performed a series of assignments in support of the University of Illinois at Chicago ’s South Campus development project.

Initially, the principal of the firm conducted a market study of the retail development potential in the area south of Roosevelt Road . This study helped UIC and the City recognize that the use of the area for UIC-related purposes was appropriate.

In fall of 1996, S. B. Friedman & Company was engaged by UIC to assist a 17-member selection committee in reviewing the proposals of four major developers seeking selection to undertake a development program for UIC’s South Campus area which stretches from Roosevelt Road to approximately 15th Street along Halsted Street . The scope of that assignment included: reviewing the development concept, offering financing alternatives, structuring the UIC-developer partnership, and evaluating the qualifications of each development team. We summarized the strengths and weaknesses of each proposal and presented our findings to the selection committee for use in a decision process. Mesirow Stein was selected as master developer.

We subsequently were asked to provide further assistance in reviewing specific aspects of the business terms between UIC and the master developer. This included review of the terms of the sale of UIC's land for residential purposes, appropriateness of the amount and structure of fees to be earned by the master developer, and suggestions as to structuring the transaction to provide additional compensation to UIC in the event that housing was able to be sold at market or a premium rather than at a “new neighborhood” discount.

The firm is providing development advisory services to UIC on its South Campus retail and office development. The office space will be leased by various UIC departments and the retail space will be leased by the private market. The firm is assisting the Auxiliary Services department in reviewing the leasing of retail space including evaluation of the developer’s proposed mix, lease terms, and financial analysis and consultation regarding funding of tenant improvements beyond raw space. As part of this analysis, we created a pro forma that evaluates each tenant space and project component, and the entire development as whole and its impact on the existing Auxiliary Services system. The pro forma includes detailed estimates of operating and capital costs and rental income. Operating cost estimates include grounds maintenance, housekeeping, elevator maintenance, trash pick-up, utility costs, and university-related costs, such as insurance, administrative overhead, and replacement reserves. The pro forma is updated on a regular basis as actual leases and letters of intent are provided by the developer.

The firm also is assisting UIC in the financial structuring of a proposed mixed-use development on the South Campus (referred to as “Super Block” or “South Campus Phase 3”) that is proposed to include student housing, a convocation center, classroom space, retail space, and university office space. While still under construction, the area is mostly completed.

Results: The firm continues to assist UIC in the aforementioned areas.