Picture a posh New York restaurant on a Wednesday afternoon around noon.

Roger Sterling and Don Draper are schmoozing over lunch with some high-powered executive from Lucky Strike. After devouring steaks and throwing back a few Old-Fashioneds, a deal is sealed.

Now, something similar may still occur in the ad business today, but certainly not in deals on public–private student housing partnerships.

“We try to establish rapport on a personal and professional level, but it’s by sitting across from college administrators at a desk, not sitting beside them at a bar,” says Mike Mouron, founder and president of Birmingham, Ala.–based Capstone Cos., a company that helped pioneer the public–private model by building about 65 public–private projects over the years.

Sure, in an effort to shape the project, private developers or managers may court a school long before it issues a request for proposal (RFP), but universities, especially those governed by ethics expectations in the public realm, demand an arm's-length distance.

“All universities, particularly public institutions, will undertake a public process,” says Jamie Wilhelm, executive vice president of public–private partnerships for Austin, Texas–based student housing REIT American Campus Communities (ACC), which has built approximately 70 on-campus public–private development deals. “They will work very diligently to have a level playing field.”

So how does a developer get an edge in this environment? It isn’t easy, but it’s possible. Schools like a track record, but if you can bring something special to the table (like a coveted piece of dirt), you’ve fought much of the battle. Still, developers encounter many hurdles in the public–private partnership arena.

Beating the RFP
At the University of Kentucky (UK), Memphis, Tenn.–based student housing REIT Education Realty Trust (EdR), which has built 42 public–private deals, invested more than five years to help university officials shape their eventual $500 million, 9,000-bed privatization project. The company traveled an arduous road to get there. It would check in quarterly with the university and, when needed, fly officials to meet in Lexington.

Despite all of this work, nothing really moved forward until a new president, Dr. Eli Capilouto, came aboard in July 2011 and decided the university needed new housing. A request for qualifications went out in October 2011; the university scrutinized applicants that following November and entered into negotiations with a partner, which happened to be EdR, in December 2011.

You’d think EdR had the project in the bag from the beginning, but Thomas Trubiana, chief investment officer at the REIT, insists that wasn’t the case. “If you can help assist the school up front, it doesn’t necessarily mean you’ll have an inside track,” he says. “There have been times when companies have worked with universities and they go through [the] process and someone else gets picked.”

But it’s certainly better to be consulting with the school on the RFP before it goes out.

“We try to get in there early and help structure the project so we’re not reacting to an RFP,” says Robert Kim, executive managing director at Irvine, Calif.–based student housing developer Hanover Pacific.

When Kim approaches a school about a project, he’s bringing a track record of working with urban schools that need to find sorely needed land next to their campuses.

“You have to bring something unique to the table,” Kim says. “Having land is the best way to do that. For many urban campuses, the lack of land is the No. 1 issue.”

Having experience may be even better than having land, though. If that happens, schools may pursue a developer before an RFP is even released. “Often, we’ll be called to sit down and make them aware of various structures and financing and a good RFP process,” Trubiana says.

But there’s also the old-fashioned, knocking-on-the-door approach when a developer spots a school that’s a good fit. Depending on the school, a developer can start seeking opportunities in residence life, finance, and administration; the CFO’s office; or with the president.

“We really try to make [schools administrators] feel comfortable with an open-book or honest approach to look at their various issues,” says Daniel I. Bernstein, executive vice president and chief investment officer with Philadelphia-based Campus Apartments. “We try to come off as creative and flexible and transparent and capable.”