Champion of the P3
As president of one of the leading on-campus development firms, Susan Eastridge has carefully expanded her company over the years.
2012 has been the year that public-private partnerships made big news in the industry. While the structures have been around for years, larger PPPs have brought more attention to on-campus development lately. Concord Eastridge Development and its predecessor companies, all founded by CEO Susan Eastridge, have been involved in public-private partnerships for many years. Student Housing Business recently interviewed Eastridge to find out what keeps her — and her company — engaged in this evolving field.
SHB: Your work in public-private partnerships led you to your work with universities. How did you get into this niche in the real estate development industry?
Eastridge: In the late 1980s, I did my first public-private project in my career. It was a large-scale mixed-use project in downtown Albuquerque. At the time, I worked for a wholly owned real estate subsidiary of U.S. West Communications, later known as Quest. It was one of the Baby Bells. The public-private partnership had nothing to do with education; it was a partnership that involved the local city government, the county, the state and even the federal government, as well as a corporate employer on the private side. We redeveloped a big city block. The purpose was to provide the city with a convention center headquarters hotel that was needed at the time. We developed the Hyatt Regency, an office building, retail and parking in downtown Albuquerque. It was challenging because there were so many stakeholders, but it was intriguing to me. I caught the bug. In 1990, I started my own company after Quest divested of its real estate business. My business was originally focused on public-private advisory because there wasn't much development going on in 1990. In 1996, I evolved my firm into a development firm, doing 100 percent education-related real estate. In 2004, I launched the third evolution of my business, which broadened a platform that centered it around education as the core focus, but allowed us to spread our wings to other types of public-private development.
SHB: What other types of projects did you expand to cover?
Eastridge: We would do projects that might involve a city or an institutional not-for-profit, or a transit authority. As we sit today, though, most of our work is in educational environments.
SHB: How has your work with educational institutions grown over the years?
Eastridge: Our real estate development practice is focused on public-private development. The majority of that — 3 out of 4 projects — has to do with higher education facilities. We came into the student housing space through our philosophy of wanting to serve our end-user client. In university-related real estate, we wanted to be able to build longstanding, trusting relationships with our university clients and be available to serve all their real estate needs. On staff, we have development expertise in multiple asset classes. This is everything from residential — including student housing — to support retail, parking, academic and research buildings. We've always come to our clientele with a mixed-use offering. We've always developed in multiple asset classes.
SHB: When you expanded your platform in 2004, did that add student housing to your capabilities?
Eastridge: Yes. We went from being The Eastridge Companies to Concord Eastridge. At The Eastridge Companies, we were doing 100 percent education, which ranged from charter schools, public and private K-12 schools and higher education. The evolution was important because higher education was seeing such a change to public-private partnerships. Universities tend to have a lot of real estate. They have diverse facility needs. Our first project that involved university housing was at the University of Mary Washington in Fredericksburg, Virginia. We built a project that had more than 620 beds of new student housing as part of a large mixed-use development. The project also had parking, office space and retail uses. We've just started another phase of that development where we are building a hotel.
SHB: What is your latest student housing project?
Eastridge: We are working on a project in downtown Phoenix with EdR — it is completely privatized — to serve the housing needs of Arizona State University's downtown Phoenix campus and the University of Arizona and Northern Arizona University's facilities in the Phoenix Biomedical Campus. That will open in the summer of 2013.
SHB: How has the public-private partnership model evolved over the years?
Eastridge: There is a broad use of the term 'public-private partnership.' What I think of as public-private might not mean the same thing to someone else. I have had to broaden my thinking of the term, quite frankly. When I came into the vernacular, I felt that it had to do with bringing alternative forms of financing to real estate projects. That's always been the cornerstone. It was to absolve the university from having to use its financial resources. Over the years, that has gotten clouded by Moody's when it stated that public-private financial structures could affect a university's credit. That's too bad, because universities need as many tools in their box as they can have. In my view, a pure public-private partnership is one where you are truly bringing an alternative source of capital. Earlier on, it was easier to characterize alternatively sourced taxable or tax-exempt bonds as an alternative source of funding for a university. Even that has become blurry. Today, it means bringing true private sector capital, or at least taxable bonds.
SHB: What are some of the universities you have worked with over the years?
Eastridge: We have worked on a number of projects, not all of them student housing. Right now, we are very heavy on university conference centers and hotels. We developed the hotel and conference center at George Mason University, called The Mason Inn. We just finished a research building at Virginia Tech. We have a hotel and conference center project underway at North Carolina State University and one underway at Rutgers University. We are also developing a hotel and conference center at the University of North Carolina at Wilmington and one at the University of Nevada at Las Vegas.
SHB: That's an interesting development trend. What is the opportunity for universities in having these conference and hotel facilities?
Eastridge: Each school has its own mission with these projects. In the case of Rutgers and UNC-Wilmington, they both have robust continuing education curriculums. They want to make it more conducive for professionals to visit campus and do coursework, and stay on-campus, and have their classroom environment be in a nicer facility. At Rutgers, they want to have the hotel and conference center be a complement to their executive MBA program. At UNLV, the mission is entirely different. They have one of the best hotel management programs in the country. They want to have a hotel and conference center serve as a living laboratory, but not for student training. They want to bring the hotel flags in and have them test out new technologies and products within a hotel environment. Also, with all the hotel/casinos and convention space in Las Vegas, there is no top-flight academic conference center there for more intimate meetings.
SHB: How has your role evolved in public-private partnerships?
Eastridge: We are always on the developer side of the table. We work on cultivating relationships with universities so we can anticipate its needs. We have a strong relationship with Arizona State University. They told us about three years ago of their concern about the lack of housing in downtown Phoenix, as it related to the growth of their campus there. That was a spark of an idea that led us to do a site search and acquire property and build a two-city block residential project with EdR. Sometimes we are bringing a solution to the table, other times we are asked to bring a solution to the table. We are always the delivery team, though.
SHB: What is the climate today for public-private partnerships? Has the deal between EdR and the University of Kentucky spawned more interest from universities? What does the future hold?
Eastridge: There is a lot more willingness to discuss public-private partnerships, certainly much more than there was ten years ago. There is still a lack of definition of the structure in the marketplace. It is, by no means, a commodity in the real estate market. I see a lot of promise in the space in the sense that people are more open to being inventive and enterprising. I'm glad that we've carved our niche in this space. Public-private partnerships almost always result in projects with an important purpose and projects that are needed. I expect those opportunities to continue to grow, but they will increasingly represent a wider variety of projects. I am also seeing a lot of success stories with public-private partnerships, and that opens up people's minds. Over the years, I've been in touch with a lot of universities and cities about monetizing some part of their infrastructure. That has some purpose. On-campus housing is a warm and fuzzy aspect of campus facilities. It is exciting to watch the UK-EdR progress.
SHB: What keeps you coming to work every day?
Eastridge: We are doing what is probably the most challenging aspect of real estate. We are trying to bring new practices and ideas into an institutional mindset. When I was doing more K-12 educational projects, I often wondered why we had so many public school districts around the country who were focused on real estate, not on educating our children. From a philosophical point of view, I wanted them to have a corporate real estate mentality. In higher education, real estate events tend to happen on a one-off basis, so putting something risky and complicated in the hands of someone who does real estate every day makes sense.
SHB: What is your outlook on the student housing industry?
Eastridge: It's been interesting over my career to see student housing formulate itself. When I go to student housing conferences, I'm intrigued by the fact that here is an asset class that's sharing ideas and trying to create understanding and transparency. There's been such a rush of so many new participants in the space, especially during the economic downturn, and that will settle back down. Companies who tend to develop other sectors of commercial real estate will be happy to go back to their usual practice and leave the stickiness of higher education behind. There will also be more of an understanding of different types of housing that are needed for all the stakeholders and constituents in higher education. There will be a movement away from four-bedroom, four-bathroom units, for example. The projects we have on the drawing board are focused on studios and one bedrooms. Proximity to campus and privacy are more P's being added to the equation in public-private development.
SHB: Do you have any hobbies that you enjoy?
Eastridge: Because my work is multi-faceted, I get a lot of my social, cultural and intellectual stimulation from it, just because of the type of real estate work I do. That is the forefront of my life. I have a great family: my children are grown and married, and I have five grandchildren. I also have two very special West Highland Terriers, and anyone who knows me knows that I'm nutty about them.
— Randall Shearin