In an on-campus student housing project, once a request for proposal (RFP) comes out, the rules of the developer–client relationship change. Any previous informal discussions between the developer and the school should end.
“[The schools] work to have a level playing field,” says Thomas Trubiana, chief investment officer of student housing REIT Education Realty Trust (EdR). “It becomes a formal process run by [the] procurement [department]. Questions are in writing, and answers are distributed to everyone.”
At that point, a developer needs to distinguish itself through its responses and its balance sheet. “You have to be a well-capitalized public or private company to be successful in on-campus development,” says Cecil Phillips, chairman and CEO of Atlanta-based Place Properties. “You need access to a lot of capital. You’re building hundreds of millions of dollars' worth of new buildings or refurbishing existing buildings.”
Schools will evaluate a firm’s experience, the team assigned to the project, the strength of its balance sheet, and the architectural team, among other things. The developer’s thought process also plays a huge role.
“Our goal is to show the university how we think through whatever their particular real estate issue is,” says Daniel I. Bernstein, executive vice president and chief investment officer with Philadelphia-based Campus Apartments. “We try to show that we’re critical thinkers and have taken different issues into account and balanced them. It may not be about bricks and sticks; it could be about sensitive ties with debt capacity or credit ratings or price points. We try to show our creative and flexible approach.”
But, just as important, developers need to prove they’ve worked on campus before. “Universities and administrators aren’t paid to give someone their first opportunity,” says Jamie Wilhelm, executive vice president of public–private partnerships for Austin, Texas–based student housing REIT American Campus Communities. “They can look at other successes as a model that someone can be successful on their campus.”
Trubiana agrees. “The key component is doing a good job where you’ve worked with other schools,” he says. “You need to create a raving fan, because these schools will check references. To have a president or head of facilities at another school speak highly of EdR says more than anything we can say about ourselves.”
Les Shaver is a former senior editor of Multifamily Executive.