ATLANTA—Corvias Campus Living, a wholly-owned subsidiary of Corvias Group, has secured $548.3 million in private financing to fund the first phase of a public-private partnership (P3) with the Board of Regents of the University System of Georgia (USG). Some are calling the model unprecedented.
Phase one of the 65-year P3 includes 3,753 new student housing beds and 6,195 existing student housing beds totaling over 3 million square feet across nine of the systems 30 campuses. This agreement marks the first time that a state system has privatized student housing across a portfolio of campuses.
“The USG is to be commended for taking such an innovative approach to improve their student housing,” says Kurt Ehlers, managing director of Corvias. “The customized 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.”
Under the terms of the partnership, ground rent, contingent rent, retained services, and reinvestment fund returned to the BOR will exceed $8 billion. Every bed will be renovated or replaced multiple times during the partnership so the student housing stays in like new condition.
“About 70% of student housing nationwide is more than 25 years old, and most of it hasn't been properly maintained,” says Ehlers. “Establishing a reinvestment reserve solves that problem by providing funding to ensure that student housing is in as good condition at the end of a long-term partnership as it was on the day it was built.”
Corvias is breaking the traditional mold in this partnership. Typically, developers keep a large share of cash flow for profit but Corvias will only take in performance-based, fixed fees. This model sets the stage for Corvias to continually reinvest in the student housing communities. On top of contingent rent, Corvias pays a retained services fee to support the campuses to manage residence life services.
USG students at all nine campuses will see better student housing as early as the fall semester. The partnership includes at least $6.3 million of up-front funding for capital repairs and renovations on all residence halls during the first year and Corvias has already broken ground at six USG campuses for the new housing.
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