Partnership Proposal to Tarleton State University

January 9, 2013

Framework of Our Partnership Values

What Makes Us Different?• Integration

– A single seamless solution

– Collaborative Culture…..Working in the best interest of our clients everyone has a seat at the table

– Aligned values with Texas A&M System HUB participation

• Flexibility– Our program doesn’t come in a box

– University can maintain operations/residence life

• Creativity– Multiple financing strategies tailored to a “Program” not “Project” solution

• Resources– Leveraging capabilities of sister companies (capital, development, construction, operations,

infrastructure)

What Makes Us DifferentIntegrationFlexibilityCreativityResources

Finance Options

Project FundingBalfour Beatty

CapitalEquity/Debt

Project FundingBalfour Beatty

CapitalBond Purchase

501 (c) 3Bonds

Ground Lease Ground Lease

Architect

Architect

Equity Structure Foundation Structure

OptionalOptional

Florida Atlantic University

Background on FAU Financing

FAU had a clear vision and goal for Innovation Village

We provided the solution• Multiple phases of housing• Athletic and recreational facilities• Retail and other amenities• Maximize financing opportunity using housing “horsepower”

Legal Structure

FAU ground lease of “Innovation Village” land to Direct Support Organization (DSO, not-for-profit) – FAU received ground lease payment in form of Capital Contribution for other

Innovation Village improvements DSO owns housing, and master lease to FAU’s Housing Enterprise

Fund (HEF)– Excess cash generated by HEF’s existing housing used to support debt

obligations for new housing– Collectively, revenues will be applied to operating costs, existing and new debt

obligations, and other subordinate bonds

Background on FAU Financing

FAU Innovation Village Apartments

• FAU creates non-profit

• FAU leases the existing housing and ground for new housing to the non-profit

• The non-profit sells bonds based on net revenue of the existing housing and the projected net revenue of the new housing

• The non-profit provides bond proceeds to the Developer to build the new project

• The non-profit has $12m left over for the university to use for campus improvements Relevant Experience

FAU(University)

RBC Capital Markets(Underwriter)

U.S. Bank National Association

(Trustee)

FAU Finance Corporation(DSO)

PGAL(Arch/Eng)

Balfour Beatty Construction(Contractor)

Series A Bondholders

Balfour Beatty

Balfour Beatty/ Capstone(Developer)

Balfour Beatty/ Capstone(Manager)

Ground Lease (New & Existing)

$12 m Ground Lease payment

TrustIndenture

Development Agreement

Construction Contract A&EContract

Property MgmtAgreement

Series B Bonds

Series A Bonds

$124.3 m

Operations Structure

• Assumed operation of existing inventory in addition to Innovation Village

• “Shared Governance” with University

– BB/Capstone responsible for Operations and Maintenance

– FAU responsible for Residence Life Programs

– BB/Capstone working with FAU to set annual rents and establish housing policies

• BB/Capstone manages Capital Repair/Replacement program through project term

Goal Achieved• Financing benefited from the “A” rating of FAU’s existing housing system –

the FAU Housing Enterprise Fund

• Subordinate Bonds privately placed by Balfour Beatty

• These bonds provided important “gap” financing• Debt service fully subordinate – paid last in the “waterfall”

• Amortization Term on Senior Bonds -- 30 years

• Bond sale yielded a Total Fixed Interest Cost of 4.78% – Structure allowed for an “up-front” ground lease payment of $12

Million – fulfilling a key FAU goal to fund Innovation Village improvements

University of Iowa

University of Iowa Project Details:

• 40 year ground lease to Balfour Beatty

• Project financed with 100% Balfour Beatty Equity/Debt

• Operations/Residence Life by Balfour Beatty Communities

• University manages billing/collections and assists in marketing

• Annual sharing of cash flows after 95% occupancy met

• University first right of refusal to purchase

Relevant ExperienceUniversity of Iowa

DeveloperBalfour Beatty Campus

SolutionsCapital

Balfour Beatty Investments

Architect/Engineers SCB

Operations / Res LifeBB Communities

Ground Lease

Debt Service

Investment

Base Rent

General ContractorBalfour Beatty Construction

Development Costs

What Makes Us DifferentIntegrationFlexibilityCreativityResources

Management Options

Flexible Management Options

Duty University Managed Developer Managed Jointly Managed

Operations Director of University Housing Community Manager Committee

Maintenance University BBC TBD

Billing University BBC TBD

Residence Life University University University

Marketing University Both Both

HomePlus®

Community Management ApproachA World Class, Fully Integrated and Comprehensive approach to property management honed over 20 years of experience.

BBC Management Philosophy

•Peace of Mind

•Success

•Happiness

Seven Focus Areas

• Community Service• Mind Building• Life Management• Personal Safety• Physical Health• Social Activity• Environmental Awareness

What Makes Us DifferentIntegrationFlexibilityCreativityResources

Project Specifics

Keys to Success: • Establish Lines of

Communication Between Parties

• Identify approval process with University and BOR

• Create Framework for Meeting All Milestones

• Financing• Development• Design• Construction

• Start the Due Diligence and Conceptual Design

• Market Study • Refine Program• Site Analysis• Financial Analysis

MilestonesKickoff Meeting 2/1/13

Negotiate Predevelopment Agreement, Business Terms

2/1 /13– 3/23/13

Site Analysis (Geotech, Topography, Survey, Environmental, Zoning and Permit)

2/1/13-3/23/13

Ground Lease Negotiations, Schematic Design /CM Budget Estimate

2/1/13-2/21/13

Design Development/CM Budget Estimate 2/21/13-3/21/13

Design Review by TAMU System 3/23/13

GMP/Permit Set (85%) 3/25/13-4/19/13

Approval by BOR/Construction Set Approval by FPC 5/2/13

Issue Construction Set (100%) 5/7/13

Financial Closing 5/31/13

Site work 6/18/13-7/1/13

Begin Construction 7/13

Project Delivery August 2014

Potential Project Scope• Design of a new, three-story, 142,000 SF residence hall for 500 students

• Construction of the new residence hall, including site work and utility infrastructure

• Procurement and installation of FF&E

22

Gross Square Footage 142,000

Semi-Suite Double and Single Units 325

Resident Assistant Units (Singles) 10

Total Beds 500

Community Lounge Included

Large Multipurpose Rooms (Ground Floor) 4

Offices for Management Staff Included

Laundry Room Included

Staff Apartment Included

Financial Model

Program vs Project Solution

Potential Sites

Potential Sites

Potential Unit Types

What Makes Us DifferentIntegrationFlexibilityCreativityResources

Other Relevant Experience

George Mason University

Football Stadium Renovation and Expansion Experience

The Cotton Bowl Daryl K Royal Texas Memorial Stadium

Ohio State University-Woody Hayes Athletics Center

What Makes Us DifferentIntegrationFlexibilityCreativityResources

Questions/Discussion