DESMAN’s expertise in understanding long-term concession lease transactions involving publicly-owned parking assets is unparalleled in the parking industry in the United States. These transactions, commonly referred to as Public Private Partnerships (P3s), involve the transfer of operational and maintenance responsibilities for parking assets to a private entity for a defined period of time (usually 20-75 years), including both the revenues and expenses generated by the assets, in exchange for an up-front lump sum payment, annual payments or a combination of both, to the public entity which owns the parking assets. The allure of these types of transactions comes from the potential to generate a significant sum of cash up-front, or a steady stream of cash, while removing from the public entity the risk and expenses involved with operating the parking assets in an ever-changing economic environment. While P3s involving public parking assets are a relatively new phenomenon in the United States, similar transactions involving public infrastructure assets (i.e. utilities, toll roads, etc.) have occurred in Europe for decades.
DESMAN has been at the forefront of these types of transactions, beginning with the first P3 in 2006. In this transaction, the City of Chicago and the Chicago Park District awarded a group of private investors, headed by Morgan Stanley, a 99-year concession lease of four underground parking garages in the vicinity of Millennium Park. In exchange for the cash flow associated with the more than 9,000 parking spaces in these facilities for the subsequent 99 years, the City received an up-front payment of approximately $563 million. DESMAN Associates was the parking consultant hired by the Morgan Stanley team to conduct due diligence related to the parking garages. DESMAN’s analyses were used to determine the long-term revenue-generating potential of the parking garages as well as the anticipated costs associated with operating and maintaining the garages over the 99-year term of the agreement. The resulting financial projections were then used as the basis for determining the up-front value of the lease.
In addition to being the buy-side parking consultant for the winning team on the first successful long-term concession lease of public parking assets in the United States, DESMAN Associates was also the sell-side parking consultant on the first and only successful long-term concession lease involving the parking assets of a public University in the U.S. DESMAN served as the parking consultant to the Ohio State University as they sought to lease their parking assets, totally nearly 36,000 spaces, for a minimum of $350 million in an up-front lump sum payment. As a result of the diligent efforts of the University and its sell-side advisors, a winning bid of $483 million was received.
DESMAN has the capability to provide the following crucial services as an advisor either on the buy-side or the sell-side of a long-term concession lease of public parking assets:
These services, whether as part of a formal process or not, provide a paring owner with input and knowledge about the long-term health of their parking system.
In addition to the two successful transactions described above, DESMAN has also been involved in some capacity with most of the every other successful or proposed parking P3s in the United States. The following is a list of the parking systems which have explored a long-term concession lease transaction involving their parking assets, as well as DESMAN’s role in the transaction: