The financial close of the 40-year partnership between Wayne State University and Corvias to develop, finance, construct, operate and maintain the university’s student housing was completed on Nov. 30. The partnership will allow the university to fulfill the demand for more on-campus housing, while maintaining affordability for students and strengthening the university’s finances.
Under the agreement, Wayne State’s entire on-campus student housing portfolio will significantly improve. This includes enhanced green spaces and new retail offerings in the residential area of campus. Corvias will deliver 841 new beds and 368 renovated beds while also managing and maintaining the existing 2,950 beds across campus. Another feature of this long-term approach is that every bed has the potential to be renovated and/or replaced multiple times during the partnership, returning all assets to the campus in new or like-new condition.
“Wayne State University’s partnership with Corvias is transformational,” said Bill Decatur, vice president for finance and business operations, CFO, and treasurer. “The university achieves numerous strategic goals through our partnership — enhancement of the on-campus student experience, new and renovated student housing, long-term financial support for maintaining student housing, and at the same time improving the university’s financial position.”
The initial investment of $307.5 million will be used to pay off $102 million of existing housing debt and fund the continued construction of the new Anthony Wayne Drive Apartments, demolition of the Helen L. DeRoy Apartments and renovations to Chatsworth Apartments. Gilbane Building Co. is the construction contractor.
Corvias will manage and maintain all on-campus housing facilities. To ensure that the first phase of the project would be ready for WSU students by fall 2018, Corvias expedited the construction process through short-term bridge financing, which allowed the partnership more time to secure favorable terms on permanent financing through a private placement. As of Nov. 30, Phase 1 of the Anthony Wayne Drive Apartments will be 25 percent completed. (Click here for a time-lapse video of the construction progress.)
“It says a lot about everyone’s commitment to our new partnership that we could start construction earlier this year in order to meet our need for additional beds by August 2018,” said Tim Michael, associate vice president of student auxiliary services and chief housing officer. “This is a great example of what can happen when all sides work together for a common goal. I’m confident our partnership with Corvias will enhance our ability to provide a first-class, educational housing experience for Wayne State students.
“Because of the partnership, an endowed Corvias Scholarship will also be established for Wayne State students, supporting the goal of providing more opportunities for students to excel and pursue their academic and career aspirations.”
With the financial close, starting Dec. 1, Corvias will begin managing all on-campus housing facilities and maintenance aspects. Wayne State will continue to operate all residence life and student-facing services. Corvias will have 28 full-time employees working on WSU’s campus and has worked diligently with union members to ensure a smooth transition of operations.
“The leadership at Wayne State decided a few years ago to look for innovative solutions to address its need for more housing. While recognizing the immediate need of building a facility, they saw an opportunity to do more with a partner,” said Dan McConaghy, partnership advisor for Corvias. “We are very proud to be in this partnership with Wayne State because it is grounded in a mutual commitment to serve students in an environment that supports the university and the greater Detroit community.”
With the surrounding off-campus areas maintaining an average occupancy rate of 98 percent, affordable housing for students has become difficult to find. Alternatively, on-campus housing rates are more affordable than the off-campus market and going forward will be set through a joint governance process between WSU and Corvias.
As a result of the good-faith partnership the past several months between Wayne State and Corvias, the university expects to begin leasing approximately 407 new beds in fall 2018 and the remaining 434 spaces by fall 2019. The property will be made up of a six-story south wing, an eight-story north wing and 11-story central tower. Once completed, it will be the largest housing complex on WSU’s campus.
“This transaction will help address a critical housing shortage in Midtown and improve the overall on-campus student experience,” said Thomas Coomes, managing director and co-head of the Midwest region of Citi’s Public Finance Department. “Citi has been closely involved in several facets of Detroit’s continuing transformation and we are delighted by this opportunity to help meet Wayne State’s student housing needs.”
To date, Michigan-based contractors are performing 88 percent of all construction work. The design team of Hamilton Anderson Associates is also Detroit-based. That totals more than $85 million performed by Michigan-based contractors.
Advising Wayne State throughout the entire public-private partnership (P3) process — including and up through the recent financial close — has been Minneapolis-based Blue Rose Capital Advisors. Blue Rose specializes in advising on P3’s and the firm's understanding of various ownership and financing structures added tremendous value to Wayne State in negotiating this transaction.
"Our team at Blue Rose is honored to have served our longtime client, Wayne State,” said Johan Rosenberg, chairman of Blue Rose. “Wayne State and Corvias have come together to create tremendous value through partnership, aligning interests and sharing a vision for the future of housing on campus."
About Wayne State University:
Wayne State University is a premier urban research institution offering nearly 350 academic programs through 13 schools and colleges to more than 27,000 students.
As a privately owned company headquartered in East Greenwich, Rhode Island, Corvias partners with higher education and government institutions nationwide to solve their most essential systemic problems and create long-term, sustainable value through our unique approach to partnership. Corvias pursues the kinds of partnerships that materially and sustainably improve the quality of life for the people who call our communities home, purposefully choosing to partner with organizations who share our values and whose mission is to serve as the foundational blocks, or pillars, of our nation. To learn more, please visit corvias.com.