Marking the first time a university system privatises student housing across a portfolio of campuses in the US, Corvias Campus Living and the Board of Regents of the University System of Georgia (USG) last week announced a $548.3 million private financing deal to fund the initial phase of a public-private partnership (PPP; P3) for the revitalisation, expansion and maintenance of student housing across nine of its 30 campuses.
The 65-year partnership calls on Corvias to significantly improve existing on-campus student housing at the nine participating campuses. It includes the development, construction, management and long-term maintenance of 3,753 new beds and 6,195 existing beds. Throughout the lease period, every bed will be renovated or replaced multiple times, a cycle of refresh that Corvias said would keep the housing in new or like-new condition.
“The USG is to be commended for taking such an innovative approach to improve their student housing,” said Kurt Ehlers, managing director of Corvias Campus Living, in a statement. “The customised solution that we developed will allow the USG to defease approximately $300 million in existing debt and build the new 3,753 beds without incurring additional debt. Ultimately, this will directly benefit students by keeping housing updated and affordable while allowing the schools to focus on their core mission of education.”
The nine participating USG campuses include Abraham Baldwin Agricultural College, Armstrong State University, College of Coastal Georgia, Columbus State University, Dalton State College, East Georgia State College, Georgia Regents University, Georgia State University and the University of North Georgia.
When the deal was first announced by the USG Board of Regents in November last year, it originally called for the addition of 3,683 beds and came with a price tag of $517 million.
In a related release, USG Chancellor Hank Huckaby said, “Quality, safe, affordable housing is our priority.” Total ground rent, contingent rent, retained services, and reinvestment funds returned to the BOR will be in excess of $8 billion, according to Corvias's calculations. Additionally, USG estimates that related construction will generate over $164 million in construction activity throughout the state of Georgia.
“We expect our initiative will generate innovation, operating efficiencies and best practices in student housing to improve the quality of the on-campus housing experience for our students,” Huckaby also commented.
In order to ensure Corvias is motivated to keep up its end of the bargain, the company will only earn negotiated, performance-based fixed fees throughout the life of the agreement, which the company said allows Corvias to return additional cash flow into a reinvestment reserve that will benefit participating campuses.
Ehlers and his team believe that the USG contract will make a significant impact on the student housing industry at a critical time.
“About 70 percent of student housing nationwide is more than 25 years old, and most of it hasn't been properly maintained,” Ehlers said.
“Establishing a reinvestment reserve solves that problem by providing funding to ensure that student housing is in good condition at the end of a long-term partnership as it was on the day it was built.”
He said Corvias has already broke ground on work at six of the participating campuses. The company is to deliver incrementally improved housing conditions on all nine campuses as early as the upcoming fall semester, with $6.3 million in upfront funding for capital repairs and renovations an all residence halls.
Ehlers added that his team is sensitive to the unique architectural features and cultural aspects of each campus, and will implement tailored construction designs to meet each of the schools' individual needs. The company has hired eight Georgia-based architecture, engineering and construction firms to assist with the implementation of the USG housing programme.