Hefty price for expansion
Wilfrid Laurier University is expanding its boundaries. And it’s not cheap.
In a deal made on Thursday, the university conducted a $58.9 million acquisition of ten apartment buildings on Ezra, with two additional buildings on Bricker and Hickory.
“We’re landlocked,” said Jim Butler, vice-president of finance at Laurier, adding that the university will have to take out a loan to pay off the properties. “It’s right on our perimeter, it represented a good opportunity to do land banking.”
Though Butler stated that a loan is required, the buildings themselves will create revenue for the university and that will essentially pay off the loan itself.
“It carries itself,” continued Butler. “I mean we’re borrowing the money to acquire the properties which generates revenues that pay the loan.”
For the time being and the near future, the student apartments – which were predominately managed by Studenthouses.ca – will continue to act as student apartments for upper year students at Laurier.
However, according to David McMurray, vice-president of student affairs, these new buildings will not be first-year student residences – at least not any time soon.
“We have no intention of putting first-year students in those buildings, the only exception for that would be if there were vacancies and we had more [first-year] students than what’ve had beds for,” explained McMurray, noting that they would lease the buildings as residences like the currently do for a few student residences.
Even though the university has accumulated some debt in the past, for McMurray, this transaction made sense.
He added that instead of constructing residences as they have done in the past, they can save money by just buying existing buildings.
“That has [student residences on campus] created a very significant level of university debt, the total university capital debt right now, about two-thirds is [because of] residence.”
McMurray explained that this deal is a movement towards more partnership within the private sector, since these apartment buildings will be temporarily managed in conjunction of a property management group by the name of Campus Living Centres. As well, once an executive director of real estate management at Laurier is hired by the administration, their movement into property management can be increased.
While it is not exactly determined how Laurier and this new company will manage the properties in the future, McMurray stated that the business model for these properties have numerous possibilities.
“We’ve got a number of different variables that we can work into a model that includes housing for first-year students, undergrads, grads, there could be a retail component in the building, there could be an academic component in the building; it could be multi-functional,” continued McMurray, adding that this purchase was no included in the campus master plan. “We could partner with others interested in investing in the long-term, secure arrangements where we know that the university is going to be around for a long time.”
While she did not want to directly comment on the private deal, Melissa Durrell, the Waterloo city councillor for Ward 7 including Ezra and Bricker, said, “It’s [WLU] also an important economic engine in this city, so I’m really encouraged and pleased that they are continuing to invest money in Waterloo, to make it a stronger city.”
“The more options students have to be living in Waterloo, the better,” she added.
Some questions, however, have arisen about the timing of the deal, especially after the ratification of collective agreement with the faculty and the university’s aspirations with a potential Milton campus.
Butler clarified this by saying, “Our capital fund is totally different than our operating fund and our operating fund relies on tuition and operating grants from the province to pay professors’ salaries.”
He asserted that the capital fund is for projects such as the recent acquisition of the apartment buildings, and with the money they will make from these student apartments the university will be able to afford it.
McMurray believes that this transaction will better enhance student life for students who don’t live in the confines of the campus, “I think it’s a good thing for the university to be paying attention to students and their needs outside of the direct business that we’re in, and that’s offering degree programs and education.”
“I think it’s a tremendous advantage for student life and the university, for the community, for the spirit; it keeps people together,” he concluded.