Corvias, a long-term financial and managerial partnership firm specializing in government and higher-education institutions, has entered into a 40-year student housing partnership with Washington, D.C.’s, Howard University.
Under the terms of the agreement, Corvias, headquartered in East Greenwich, R.I., will assume managerial and maintenance responsibilities for the university’s four largest housing facilities: the East and West Plaza towers, which will encompass 1,730 beds, and the Drew and Cook residence halls, which encompass 522 beds. The firm will also perform a full renovation of the East and West Plaza towers and capital improvements for the Drew and Cook halls.
Terms, Goals, and Benefits
Corvias made a similar, 65-year partnership agreement with the University System of Georgia in 2014. The company’s other partners include Wayne State University and the Department of Defense, and its partnership base continues to grow.
“We have a lot of the colleges and universities across the country faced with a lot of debt on their balance sheets, which has fixed what they can do,” says Chris Wilson, a member of Corvias’ leadership team in the Howard University deal. “And a lot of the colleges … they’ve been doing one-off fixes to solve an immediate need that’s right here and now, rather than having something in place that can solve the systemic challenges that they have over time.”
Via private institutional investors, Corvias has raised $144 million for the Howard project, which it will reinvest in the renovation plan and the immediate needs of the school’s facilities. This includes the retirement of some university debt, transaction costs, and the creation of a reserve fund for future expenses, including continuing residence-hall needs and discretionary university initiatives.
The entirety of the project’s annual residual cash flow will be distributed directly to the university. Corvias estimates that this sum, an estimated $3 million per year, could cover 70 full-ride scholarships. Howard will have the final say in the use of its revenue, which could be reinvested in the partnership assets or allocated to another university need.
Corvias will continue to support managerial and maintenance services in the renovated buildings and receive a performance-based management fee for its services, which Wilson describes as “a fee for the value we bring.” This arrangement places the profit of the company in the hands of the university, ensuring that both parties remain invested in the plan’s success.
“We spend a lot of effort in working with the university to make sure that we’re reimbursed on a basis that’s in line with the goals of the partnership. So we need to perform in a manner that [befits] good partners over the long term, and then we’re obviously compensated, assuming we meet what we say we need to in the best interests of the partnership long term,” Wilson says.
A rendering of a lounge and study area in the West Plaza Tower renovation plan.
Stakeholder Feedback
The West Plaza Tower renovation will be complete by August 2017; the East Plaza Tower renovation, in August 2018. The two buildings will include expanded common rooms and fitness centers; redesigned, private room layouts; and technological upgrades.
“The rooms in the towers are pretty; they’re apartment-style [and] reasonably spacious,” Wilson says. “They’re just really outdated, and a lot of the infrastructure needs to be upgraded according to modern standards. Particularly the Internet and the things that are important to the students of this day. But the big part of it is … the social spaces we’re creating, which are the spaces like the student centers and the learning environment, the rooms, and a lot of the facilities that we’re creating that are core to what we promote.”
Wilson credits both the investment of the student body and the dedication of the university’s faculty with the success of the design and the new amenities available. The Corvias team solicited input and feedback from students, shareholders, and faculty members at every turn, a process that became integral to the final renovation design. “If you speak to a number of people who are involved in it, they can talk almost as passionately about it as we do,” Wilson says, “when it comes to explaining the difference we’re making.”
In keeping with the desires of the university, the towers’ rental rates will be set below market rate, and the university parties will retain control of how much the rates can increase each year.
Looking Ahead
Corvias has worked closely with Howard’s faculty and staff in conjunction with the university’s master plan. When asked about the 40-year future of the Corvias partnership in particular, Wilson speaks reverently of the university, which is one of the oldest historically black colleges in the country and among the very few with federal appropriations.
“You get very humbled by how special Howard University is when you look at their mission and what they’re really trying to achieve and where they really want to go,” Wilson says. “And they’re in the process of a very important time in their life, as they’re really starting to change around some of the things that have been challenging for them in recent times. They’ve got a great leadership team there [and] they’re looking broadly about how they bring partners in, partners they truly trust.”
Corvias and the university will share and maintain control over the partnership with a newly formed management review committee, in which each party has equal voting rights. As the university’s needs evolve, Wilson expects the partnership will evolve as well.
“There are other needs the university has,” Wilson says, “and whether that be furthering additional housing, we’re having discussions with them about how that may [be suitable] in relation to the partnership. … I think what we can do through this partnership approach will be … to really [be able to] shape this industry in a way that will make an enormous difference for students of the future. And I’m really excited to be a part of it.”