Corvias Campus Living, a division of East Greenwich, R.I.-based, Corvias Group, will construct 3,683 new beds across seven of the nine privatized campuses. It will also be responsible for managing the operations of the new housing facilities, as well as 6,195 existing beds for the duration of the 65-year partnership across nine of the USG’s 31 campuses.
Kurt Ehlers, managing director of Corvias Campus Living says the company has been gearing up for this work.
“Though we're a relatively new company, we've hired some of the best and most experienced personnel from the student housing industry,” he says.
Corvias’ agreement with USG includes performance-based fees, which tie compensation to metrics; a reinvestment account that is projected to exceed $2 billion over the life of the partnership; $5.6 million of up-front funding for capital repairs and renovations to take place in the first year on existing housing; and the inclusion of Georgia-based architecture, engineering, construction firms, and subcontractors.
While Corvias is relatively new to the student space, its experience with public-private partnerships goes back to the Military Housing Privatization Initiative (MHPI) in the late 1990s. The company did more than $2.7 billion in partnership financing for the military, and its national portfolio extends from Alaska to Florida, with more than 26,145 units and 82,807 beds owned and operated across nine states on more than 16,577 acres.
Ehlers says that military experience has prepared the company to do to work with colleges and universities. For one thing, it's familiar with going through the Request for Proposal (RFP) process and doing large-scale housing projects for the public sector. And the influx and departure of large numbers of residents at once is also comparable in the student and military sectors.
“At times, you can have just as much turnover at military installations,” Ehlers says.
This is the second student project for Corvias Campus Living, which was established in 2012. That year it secured a deal with Alabama College of Osteopathic Medicine in Dothan Ala.
“The fact that a private guy was able to win this bid is telling,” says Ryan Burke, an analyst at Newport Beach, Calif.,-based Green Street Advisors. “For both ACC and EdR, being REITs has been a huge competitive advantage for them. It still is, but this means there is a new company that could do this.”
While EdR, along with Dallas-based Balfour Beatty Construction (another company with a military background) were finalists, ACC was not. Burke says both REITs prioritized other deals. “Out of the 15 opportunities that ACC and EdR are pursuing, this one is not one of the most attractive,” he says.
But with their military housing experience, companies like Corvias look to be increasingly competitive into the future.
“We are having active and ongoing discussions and evaluating solutions for well over two dozen schools, many of which are private,” Ehlers says. “In addition, we are actively responding to or considering a response on three or four other RFI, RFQ or RFP's."