P3 Financial Structuring
As a full-service national student housing development firm, Servitas has delivered projects under a variety of transaction types and structures. Our firm has extensive experience in Public-Private Partnership (“P3”) tax-exempt financing that funds 100% of project costs, as well as conventional structures using taxable debt and equity. We have a wealth of experience in P3 tax-exempt financing with 100% debt, as well as conventional structures using variety of equity sources (including Servitas and third parties). When selected as the developer by a college or university, we have always succeeded in getting the project financed. Past project financings range from 112 beds at Northeast Texas Community College to 3,406 beds at Texas A&M University. Regardless of the option ultimately identified as the best suit for your college or university, Servitas can provide the financial solution.
Perks of P3 Financing
What’s the benefit of investing back into the education system? Historically, tuition, state grants, and fundings, and donations were the limited sources of funding the university systems could invest into infrastructure needs. With P3s, the university is able to diversify their income streams, increasing the amount of cash flow available for budgeting, without having to raise tuition for the students. The school receives increased funding for research, raises the level of facilities and staff, and can increase the credit rating of the school
which allows the school to secure funds more easily on future infrastructure improvements. With a P3 model, it is not necessary to go through additional government reviews or budget approvals. This freedom also allows the school to be eligible for more government grants and increases their ability to secure corporate sponsorships. Each of these improvements means better recruiting and retention on the student body.
All this is done at less risk to the University via the P3. Instead of the school taking a hit on their credit rating, utilizing their current funding, or securing a private loan, the school can avoid the construction risks such as budget overruns or defaults by contractors that any construction project might encounter. This can increase the university credit rating since there is no contractual liability back to the school and added cash flow from the project goes to the university benefit.