Master Lease Solutions to Solve On Campus Housing Shortages Mannix Clark, Associate Director of Housing - University of Minnesota Heather Sizemore, VP of Operations - University Student Living Barrie Nichols, VP of Leasing and Marketing - University Student Living

Where Students are Living According to The College Board, 40% of full-time college students at public universities and 64% percent of students at private universities live on campus. The remainder of students live off-campus or with their parents. That leaves 60% and 36% of students respectively living off campus. The size and attributes of the student housing sector have attracted large institutional investors. Institutional interest and investment in the student housing sector is growing as a result of favourable demographic trends, stable and recessionary-resistant demand, limited on-campus housing, highly-fragmented industry ownership, and the growing obsolescence of on-campus housing stock; factors which are expected to bolster the sector in the future. Institutional investors are also attracted by student housing’s higher cap rates, the potential to provide diversification within the apartment sector, and operational synergies with conventional apartment portfolios. In this report, we discuss the characteristics of student housing, and the opportunities and risks associated with this growing niche sector. 2 THINK

Common Goals Provide living environments conducive to social interaction, academic excellence and personal development. Social interactions and community development that will prevent student isolation Academic support to ensure matriculation through graduation Personal development to prepare students for successful careers and social interactions

College Enrollment Growth Projections 17.3M Students in 2014 14% Increase over 11 Years 19.8M Students in 2025 *Source: National Center for Education Statistics

6,688,518 off campus beds This is a chart to show how many beds have been added in the off campus sector according to Axiometrics.

Case Study Radius on 15th University of Minnesota The rising cost of a college education and the increasing levels of student debt are viewed by some as a potential risk to the continued growth in college enrollment that drives demand for student housing. College costs are indeed rising but typically at a modest rate, especially for in-state students, as most colleges realise that affordability remains paramount. For example, The State of Virginia will be raising tuition for in-state students by an average of just $370 per semester in the coming 2017-2018 school year. Tuition is also considerably lower for those that attend in-state schools, i.e., in the state in which they and their parents reside, and significantly higher for out-of-state students, and especially at selective universities. However, in- state students represent the large majority of schools’ total enrollment. Lastly, while student debt levels are high, only 50% of the students attending public four-year institutions in the 2013- 2014 academic year had student loans, as compared to 78% of the students at for- profit private institutions. Debt levels were also lower for students of public universities, with an average loan award of $6,650 as compared with $8,585 for students at for-profit universities. 200 Units / 772 Beds 1, 2, 3, and 4 bedroom units Located adjacent to UMN practice field

Large common area lounges invite residents to gather informally for socialization. The 24 hr fitness center includes machines, cardio equipment, free weights and Fitness On Demand.

Fully furnished units offering single and double occupancy, private and shared bathrooms. The large common area space is conducive to resident functions and community building.

Master Lease v. P3 Agreement Number of Parties involved only 2 in most cases at least 3 Duration of Agreement as short as 1 semester usually 20-30 years Length of Time to Complete Agreement as little as 3 mo. on average 12 mo.

Benefits of a Master Lease Shorter length of commitment Expedited solution for housing shortages Provides additional housing options to complement or supplement current housing stock Helps support quick enrollment growth and recruitment of student athletes Flexible operational solutions A partner to ease the transition process

More Than a Partner on Paper

Key Components of an RFP University Highlights Repairs and maintenance Ethernet, Wi-fi, CATV Parking Amenities Office Space Security (Access, etc) Unit Rent by year Funishings What is the cost compared to existing housing options? Management Perspective What roles are designated to the management company and the University? What is the notification period for renewing? What is the payment method?

Why? Housing Strategy Plan Board of Regents Options Available

Timelines and Expectations March 2016 - Review Housing Options April 2016 - Release RFP August 2016 - Award RFP September 2016 - Begin planning August 25, 2017 - Master lease begins

University Implementation Model - RACI What is a RACI? Leadership Tours Meetings Internal Committees Leadership Admin Hall Staff/Bldg Ops Res Life Contracts, Assignments & Billing Communications Technology Facilities Finance

Checklists, Checklist and more Checklists Sample Checklist Created or in progress Important Dates Room Signup Social Media Service Differences (CATV, Internet, etc.) Assignments Turnover Lease Questions and possible addendums

Negotiation & Execution - Division of Responsibilities Leasing and Assignments Residence Life Facilities IT

Lessons Learned

Questions