Two years from now, Texas A&M and the A&M system expect to open a $355 million dollar student housing complex at the corner of George Bush and Penberthy.
Last week, WTAW News reported about the public-private arrangement to build and operate the “Park West” development of 1,300 apartments and townhomes.
Click HERE to see the original story.
More details were presented Thursday about the partnership between the university, the system…which owns the land, a not-for profit company that will own the improvements, a for-profit company hired to operate Park West, and a for-profit company handling bond financing.
Over the next 30 years, A&M is expected to receive more than $600 million dollars from student rentals. System vice-chancellor Phillip Ray was asked why couldn’t rates be less to reduce student costs.
Park West will be built on land owned by the system and leased to a non-profit that hired a third party to issue bonds to finance construction.
The system then hired a for-profit to operate the 48 acre development, which also includes a parking deck and surface parking.
A&M and the system will also be looking to create retail businesses on an adjacent eight acres.
Further details are in the following news release from the Texas A&M System:
Texas A&M University System Chancellor John Sharp and Texas A&M University President Michael Young today announced a public-private project that will provide hundreds of millions of dollars for academics and research at the university.
The Texas A&M University System has selected Servitas, LLC to develop 48 acres west of the George Bush Drive and Wellborn Road intersection into student housing. The land will be ground leased to NCCD-College Station Properties LLC, a Texas nonprofit corporation, which will engage Servitas to develop the property and contract with Servitas Management Group, LLC to serve as manager of the development.
Under the terms of the ground lease, NCCD-College Station will pay $18.5 million upfront to Texas A&M University, and future revenues are projected to average $20 million annually over 30 years. The facilities will revert to The Texas A&M University System upon termination of the ground lease.
Raymond James served as the underwriter for the project and managed the financing process. This included coordinating the legal, structural and approval process through the issuer, The New Hope Cultural Education Facilities Finance Corporation. Once the transaction was structured, Raymond James took the bonds to the market garnering an overall cost of funds of 4.82% with a final maturity in 2047.
Park West, as the development is to be known, is the largest of five recent public-private projects of the Texas A&M System in College Station. Those five projects are expected to generate more than $900 million in benefits to Texas A&M over the life of the long-term projects — typically 30 years or more — and Park West will account for almost two-thirds of that total.
The cash-flow from the public-private projects is in addition to earlier actions to generate hundreds of millions of dollars by outsourcing services and reducing administrative overhead.
“Every extra dollar we can generate or save is one less dollar from the students, their parents or Texas taxpayers,” said Chancellor Sharp. “Besides the revenue it generates, the Park West project also puts the debt and the risk on the books of the private sector, not with the A&M System.”
“At Texas A&M we continue to find innovative ways to provide 21st Century tools in order to meet 21st Century needs. This project will generate revenue that we can invest into high performing faculty, research and teaching that allow our students to receive an elite education at an affordable price,” said President Young.
The 48-acre site, which is currently pasture, is adjacent to a 7-acre tract that may be developed as retail as another phase of this project. The overall 55-acre tract is bordered by George Bush Drive on the north, Penberthy/Jones-Butler Road to the west and Luther Street to the south.
When the Park West development opens in August 2017, it will provide an additional 3,402 beds in the community for students in facilities ranging from studio apartments to three-bedroom garden-style units.
“National Campus and Community Development Corporation (NCCD), the sole member of NCCD-College Station, was formed in 2006 as a 501(c)(3) not for profit to do projects just like this,” said Greg Eden, President of NCCD. “Given the role of NCCD-College Station as the borrower and title holder for the project we are delighted to be working with a team of professionals on the largest student housing undertaking this year in the United States. The leadership of The Texas A&M University System is clearly positioned for executing world class projects that draw upon the talents of both the university system and the private sector.”
Michael Short, Chief Operating Officer of Servitas, said “At more than 3,400 beds, the scale of this development is like nothing else in College Station, or anywhere in the U.S., in terms of new student housing. We are excited about the opportunity to develop a project for Texas A&M students that is paving the way for the future in terms of design and features. We believe that our design of the site, the service, and the amenities will be very attractive to students. We look forward to developing this truly unique property in College Station.”
In February a market study by Alvarez & Marsal Real Estate Advisory Services of Houston concluded that the local rental market would support the development. It noted that Texas A&M University has enjoyed high demand for student housing for the past decade and that enrollment growth has averaged 2.7 percent per year —or approximately 1,331 students annually — since 2005.
