Pioneering P3 Student Housing in Mississippi
Mississippi State University
Leading the way with Mississippi’s first student housing public-private partnership
Mississippi State University (“MSU”) recognized it needed a strategy for a large former graduate student housing complex on the edge of campus, Aiken Village, now sitting vacant. Due to significant but costly repairs needed to the aging buildings, MSU had closed Aiken Village several years prior. MSU now grappled with a growing need for student housing, and recognized an opportunity to reconceive the site’s potential.
In 2016, MSU engaged U3 Advisors to lead efforts around new housing at the Aiken Village site, using a public-private partnership. MSU recognized that a partnership would be necessary to keep the project off MSU’s balance sheet, a key goal. However, student housing public-private partnerships had never before been executed at MSU, nor elsewhere in the State of Mississippi. Our role was then to navigate the University through the process, from confirming student housing demand and desirability of the particular site, to securing necessary state legislation and approvals, to selecting and negotiating a transaction with a third-party developer.
U3, in partnership with Demographic Perspectives, started out by investigating MSU’s housing goals, through interviews with key University stakeholders and evaluating existing housing inventory. Our team conducted student interviews and managed a detailed online survey to test student demand for additional housing at the site, based on factors like geography, potential types of units, and rent sensitivity. Using all of these data points, U3 developed a financial model testing redevelopment of the site under several physical and rent structure scenarios. We integrated these findings with a thorough analysis of the private student housing market in Starkville, which was experiencing a wave of high-end residential development targeting MSU’s 20,000+ students. Through market data and interviews with local public and private stakeholders, we quantified achievable rental rates and expenses for the project, construction costs, and capital market benchmarks.
As our team dove further into the analysis, it became apparent that the site offered an opportunity to provide a much-needed option for upperclassmen housing in particular, while generating revenue for the University. Moreover, we understood that redeveloping the site with intentional place-making efforts would be a key step towards enhancing the western edge of the campus. Specifically, the site could enhance connections between the campus and Starkville’s Downtown and the popular Cotton District mixed-use area.
With a clear set of development objectives and parameters, MSU was ready to begin approaching the private market. U3 modeled potential development and partnership structures and made recommendations based on factors including cost of capital, governance, control, credit, and balance sheet. These recommendations shaped the Request for Proposals our team drafted and managed on behalf of MSU, which garnered bids from multiple major student housing developers. Over several months, U3 worked closely with MSU to review the bids, interview developers, and ultimately negotiate a partnership with the selected developer, Greystar Real Estate Partners.
This process culminated in the successful opening of the new College View development in August 2019. The $67 million facility includes 656 residential beds, 46,000 square feet of retail space, and a 7,000 square foot addition to the MSU Child Development and Family Studies Center. The public-private partnership with Greystar gives MSU the benefits of a brand-new building without issuing bonds or assuming additional debt. Greystar is financing, building and managing the development utilizing a 40-year lease of university land with a 10-year renewal option.