Updated: Sep 10, 2020
The COVID-19 pandemic is placing unprecedented pressure on the financial performance of P3 Student Housing Projects. The movement online of the Spring 2020 semester, the cancellation of summer programming, an online Fall 2020 semester and/or socially distanced on-campus housing, all will lower the revenue potential of each project. If the decreased revenue cannot be offset by expense reductions, under most deal structures, the institution will be responsible for making up the shortfall through support payments. These payments may place the institution in the awkward position of having to make a multi-million-dollar payment to an outside provider while justifying significant reductions in salaries and expenses across the campus.
DeveloP3rs, a division of Blue Rose, has released a whitepaper, How to Conduct Forbearance and Debt Restructuring for Challenged Student Housing Projects, in an effort to help institutions understand what the process for seeking financial relief on challenged student housing projects might look like.
The whitepaper lays out a 6-9 month process that involves bringing all parties to the table, developing plans and contingencies before approaching investors to seek a short-term forbearance or a full debt restructuring. The process can be applied to projects that were experiencing stress prior to COVID-19 and/or projects where the stress is COVID-19 specific. The key difference is that deals that were experiencing stress pre-COVID-19 will require additional planning to give investors confidence that the project can return to profitability post forbearance/restructuring.
You can find the full whitepaper here.
Johan Rosenberg and Justin D. Krieg, PhD
DeveloP3rs - a Division of Blue Rose Capital Advisors, LLC/ TRIL 1 LP
www.DeveloP3rs.com | (952) 746-6050 | firstname.lastname@example.org