For new players entering the student housing field, striking a public private partnership with a college is somewhat of an anomaly. Universities like to see a proven track record of experience and are less likely to trust a newcomer with such a partnership that can last for close to 50 years.
But though it's only now celebrating its one-year birthday, Cary, N.C.-based Corvias Campus Living has built solid relationships with some private schools across the country.
“As you begin to work with a potential partner, the very first thing you need to do is make sure you have absolutely aligned interests,” says Kurt Ehlers, managing director at Corvias. “We can’t be focused on net operating income, residual income, and shareholder’s financial targets. We have to make sure our approach and requirements as a company do not strain the school.”
Ehlers is quick to point out that their approach is not within the traditional public-private partnership structure. And because the deals are in its beginning stages, Corvias chose not to disclose the schools they were working with.
But last November, they entered their first partnership with Alabama College of Osteopathic Medicine, and its first wave of residents are moving into three new 30,864 square foot student apartment buildings Friday.
Not Exactly a Rookie
Corvias’ quick success could be due to its military housing background. Corvias' Group's affiliate, Corvias Military Living, has some deep institutional knowledge in striking partnerships.
“[We took] 13 years of developing and operating partnerships with the Department of Defense, taking that model and that approach and applying it to a space in higher education to understand where there might be differences and work through some of those,” Ehlers says. Their military division has done close to $3 billion in real estate development with the Department of Defense and all of its partnership structures.
So, the vertically integrated company is already set up to provide property management services in long-term partnerships. But Corvias is also looking beyond the P3 model to measure the long-term growth and reinvestment of the community, not just the student housing facility, which Ehlers says many schools struggle with.
“The owner of the housing program for most of these deals is taking residual income, but not reinvesting into programs,” Ehlers says. “It creates short term fixes, and long term challenges.”
This year has been pretty educational for Corvias, as they’ve gotten to better understand the industry, its focus, and its customers. Their early success was a reinforcement of how their approach and model works, Ehlers says.
The company never had a hard financial target entering the business last year, but exceeded the number of schools it expected to work with by three times their original goal. Ehlers says he expects the same amount of success going into 2014, with a focus on brand awareness and honing its development of new partnerships.
-Linsey Isaacs is an assistant editor with Multifamily Executive magazine. Follow her on twitter @LinseyI to continue this conversation.