Transposed from a Student Housing Business Magazine article by Randall Shearin (November/December 2023 Issue)
Radnor Property Group has made a name for itself by being a somewhat silent partner in public-private partnerships, many of which involve student housing. The company got its start in 2000, when founder David Yeager launched the company following a career with institutional real estate firms. Radnor was originally launched as an advisory firm that served as a fiduciary for non-profits and corporations, undertaking real estate projects on their behalf. With Radnor based in greater Philadelphia, most of the projects in its early years were located in Pennsylvania. The company’s typical size project was usually between $20 million to $25 million.
Yeager took a sabbatical from Radnor in the mid-2000s when then Pennsylvania Governor Ed Rendell tapped him to be the executive director of the Governor’s Action Team, charged with attracting new business to the state. It was a move, says Yeager, that was instrumental to Radnor’s success.
“Leading that effort showed me the local economic drivers that power cities like Philadelphia and Pittsburgh, as well as smaller towns in the Commonwealth of Pennsylvania,” says Yeager. “What drives Pennsylvania, as well as other rustbelt states in many ways, are the educational and healthcare industries, known as ‘Eds & Meds’ — the size and number of colleges and universities in the state is the second largest on the East Coast. They are a huge economic driver for our state economy.”
Once his stint in public service was done, Yeager completely retooled Radnor Property Group to focus on public-private partnerships (P3s). The company began working with small to midsize colleges and universities. These institutions reached out to Radnor to develop and provide its own capital for student housing and other auxiliary uses like gymnasiums, office buildings, childcare and bookstores. Some of these P3 opportunities involved legacy assets on campus vitally important to the university’s culture and fabric. This prompted the use of special financing to reduce costs for the university, like historic tax credits, New Markets Tax Credits, and brownfield grants.
“We worked our way into a number of complicated projects that would never have occurred without innovative and creative solutions,” says Yeager. The company’s first P3 project involving student housing was with King’s College in Wilkes-Barre, Pennsylvania. Radnor developed a new student housing project on a polluted university-owned property used formerly as a dry cleaning facility. Radnor executed a long-term ground lease with the university, remediated and cleaned up the site, and built a new 165-bed student housing project with ground floor retail and a childcare center on a long-term master lease.
When the Great Recession hit in 2007-2008, the company had some of its best years due to its creative financing approach and the demand for new projects in the Higher Ed space in a capital constrained environment. As time went on, Radnor’s reputation grew, resulting in larger projects and an expanding geography. The company’s projects now range between $50 million and $150 million, with student housing bed counts ranging from 250 to 1,000 beds. The company is headquartered in Villanova, PA, and now has offices in Charlotte, NC, Hanover, NH, and Bellevue, ID.
Today, the company is active with a number of university state systems, such as the University of Maine System and the University of North Carolina System (UNC). Within the UNC System, Radnor is developing a major three-tier project at Appalachian State University. It has partnered with Harrison Street to build faculty and staff housing in App State’s Innovation District. Radnor is serving as the master developer, assisting the university and Harrison Street in building a carbon neutral innovation district by applying extensive site and building measures to attain a net-zero carbon footprint. On behalf of the university, Radnor is also developing a laboratory building for new research.
“Complexity of a proposed project doesn’t concern us. We will look at a 1,000-bed opportunity as comprehensively as a 250-bed renovation or mixed-use development, while being specifically in tune with the university’s priorities and culture,” says Yeager. “Each project addresses a unique need for a university and not being formulaic in our approach to solutions results in a creative and honed solution for our university partners. Of course, we would love to take on simple and straightforward projects as well. However, we don’t see too many of those.”
Radnor is currently developing its third project at Duquesne University in Pittsburgh. In 2018, the company redeveloped a 1960s-era high-rise called Brottier Hall that was repositioned to 676 beds of modern student housing. Soon after, Radnor redeveloped another 50-year-old student housing building, St. Martin Hall, which resulted in 323 new beds.
“We see opportunities in dealing with obsolete assets that have been an important part of the grain and culture of a university,” says Yeager. “Many of these buildings were built 50 to 70 years ago and have deep meaning on-campus, but also have a dire need to be refurbished.”
The company’s current project on the Duquesne campus is a ground-up development of a 556-bed student housing project called Forbes Hall, which will open in August 2024. All three projects represent an investment of over $185 million on the Duquesne campus. Once Forbes Hall is complete, Radnor will have over 1,000 beds under management on the campus.
In addition to on-campus development, the company has also done a number of projects adjacent to university campuses. For example, the company developed a 576-unit high-rise apartment building adjacent to Philadelphia Community College, valued at over $200 million. The company has developed similar projects near the Drexel University and University of Pennsylvania campuses, also in Philadelphia.
“We prefer projects that are larger than 250 beds — and go as high as 1,000 beds,” says Yeager. “Our pipeline of new projects has never been deeper. Notwithstanding the challenges of the debt market today, we see great promise in student housing, and specifically energy-focused development, like App State.”
While Radnor has remained relatively under the radar, the increased size of its projects has pushed the company into headlines in 2023. “Because of the complexity of some of the projects that we’ve been involved with, we are getting traction on larger redevelopment opportunities, and district energy projects on college campuses,” says Yeager.
Another opportunity for Radnor has been universities seeking to increase the size of their medical schools or establishing new ones, particularly those serving rural communities. The company is currently working with a health system in Maryland, Meritus Health, to build housing for its new osteopathic medical school.
“The financial structure of our developments are either equity or 501(c)3 transactions using public or private bond proceeds,” says Yeager. “These projects are long-term vehicles and align with our investment strategy as long-term partners with our university constituent. As partners with a long view, our success, as evidenced by our repeat university projects, is to follow through on promises made and to execute. That means everything to us.”
Read the original article in the Student Housing Business Magazine – November/December 2023 Issue