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As P3s Grow in Popularity, Tips for Achieving Optimal Results

JLL Paper Outlines Four Steps Government Entities Can Take When Implementing P3s

WASHINGTON, SEPTEMBER 9, 2014 -- Many public-sector entities are looking to public-private partnerships (P3) as a way to alleviate potential real estate problems with the development or repositioning of a major property or portfolio.

While each P3 is unique and contains its own set of complexities, a new report from JLL's Public Institutions Group says achieving optimal P3 results comes from successfully navigating four basic steps.

1) Identify a feasible project
P3s are ideal for large or complex projects where profits can be derived from land controlled by the government or an institution. P3s have helped universities develop student housing or other campus amenities, and municipalities have maximized returns from P3s by renovating transportation hubs or opening up unoccupied properties to private sector use.

2) Set up appropriate procurement
Achieving the desired level of interest in a potential P3 project is often the most challenging element for public entities. Public requests for bids will be measured by the private sector based on expectations for return on investment (ROI), financial contributions and cash flow risks. The key dynamic is the relationship between financial return and risk.

3) Select a key partner
Because each P3 is unique, most P3 proposals will likely be new territory for both the public and private partners. But all winning P3 proposals are straightforward with no doubt as to the bidder’s intent. Selected proposals should address basic factors, including historic preservation, sustainability and impact on the community. Experienced private developers understand the criteria used by public entities to measure proposals for P3 projects.

4) Long-term asset management
Most of the heavy lifting in a P3 project comes after the bid process is complete. The development phase should follow a long-term, comprehensive plan that outlines goals and objectives with detailed strategies and processes. The structure of this plan is critical to overcoming inevitable hurdles and obstacles, which can often mean the difference between a project's success and failure.

"P3 projects are becoming more popular as the public sector continues to witness their successful implementation by other non-profits or government agencies nationwide," said Kevin Wayer, Co-President, JLL Public Institutions Group. "But the odds for achieving a successful P3 project are much greater when someone on the team has previously navigated the workings of public-sector groups and their decision-making rationale and processes."

Wayer says that P3s do provide capital resources, but they should be looked at as a project-delivery method instead of a funding mechanism.

"Utilizing the private sector for in-depth real estate knowledge and creativity can create winning scenario for all parties," added Barry Scribner, Co-President, JLL Public Institutions Group. "It's often quite important for public institutions to select a partner with a successful history of working with both the public and private sectors to achieve a successful and mutually beneficial P3 project."

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000.  On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or 280.0 million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $50.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit