Structuring a Massive Gift

Dec 8, 2017

Credit Wikimedia Commons

A hundred million dollars can buy a lot. When it comes to a contribution to a university, it can be a complicated gift that needs to be carefully structured. We get more on that from Pacific Business News Editor in Chief A. Kam Napier.

Recently, Jay Shidler, managing partner of The Shidler Group, announced he would double his support for the University of Hawaii Shidler College of Business and add a real estate component. PBN met with Shidler to find out how this works.

Shidler has, since 2006, given a total of $100 million to the university, starting with the initial gift of $25 million that put his name on the building. The additional gift of interest in various commercial real estate properties is meant to provide the college with permanent, long-term support. The inspiration for how he structured this deal, says Shidler, was Kamehameha Schools, which has built a trust valued at nearly $11 billion by leasing land. Ground leases under such properties as The Royal Hawaiian Hotel, the Kahala Hotel & Resort and Kahala Mall, to name a few, generate almost 30 percent of the trust’s annual revenue.

Shilder has granted UH an interest in the ground leases under 11 commercial properties in five mainland cities, worth $117 million. Over the next 100 years, those ground leases could provide a steady stream of revenue totaling over $2 billion.

Support like this is crucial for the business college, which can’t rely on government contracts or research grants in quite the same way as the sciences. The college’s dean, Vance Roley has to be entrepreneurial about approaching prospects like Shidler and asking for their support. Tangible benefits from that support include the fact that faculty endowments have grown from six to 38 since Roley joined UH in 2004.