Insurmountable operating costs

A suburban college situated on a beautiful historic site in an affluent region had been experiencing a steady decline in enrollment for many years and was facing a difficult decision about the future of the property. With an ongoing operating burden and significant deficit, the institution could not continue operations without finding a way to generate income. After receiving advice from a national broker to demolish several of their Gothic-revival style buildings and private cemetery to build an office park, the college decided to explore other options. 

A comprehensive analysis

Shortly thereafter, DBI was retained to evaluate the property and propose strategic solutions to the college. As DBI embarked on the project, several challenges became clear: the historic buildings, while picturesque, did not lend themselves well to modern uses, and any attempts to reposition the property would be constrained by strict zoning and a highly regulated Township. DBI conducted a comprehensive analysis of the grounds, buildings, and zoning restrictions, working closely with a team of architects and engineers. To better understand the political and community sensitivities surrounding the property, DBI met with current and former elected officials to determine what was acceptable to the different constituencies. DBI then reached out to 60 potential end users across more than 18 industries to inform strategy development.

Scenarios for the future

This process resulted in three scenarios for the future of the property: monetization through partial sale to a developer, leasing undeveloped portions of the property to a solar developer, or repositioning of the portions of the property as a K-12 school, which would generate income for the college, and public cemetery. DBI quantified the risk and rewards of each scenario, breaking each down into four ownership strategies ranging from the existing Owner retaining complete ownership to retaining partial ownership.

A profitable transformation

DBI embarked on a successful implementation and transformation of the beautiful property. Portions of the site were rezoned, and DBI secured long-term leases with private K-12 schools for some of the historic buildings. By securing tenants, DBI was able to shift operating costs away from the college and negotiate for tenants to undertake the renovation of the aging buildings. In addition, DBI identified a cemetery operator who, as a partner in the venture, anticipates bringing up to tens of millions of dollars over the coming operating years.

Interested in learning more about this project?  

Contact DBI Project Executive Jonah Stern.

Please note: While details have been altered to protect the anonymity of our clients, the nature and outcome of each case study remains accurate.