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Oct. 18, 2012

TRANSCRIPT: Facebook Chat with John Picerne, CEO of the Corvias Group and Picerne Military Housing

By Jessica Fiur, News Editor

Providence, R.I.—On Tuesday, October 16, John Picerne, CEO of the Corvias Group and Picerne Military Housing, participated in a live chat on the MHN Facebook page to answer readers’ questions about student housing and military housing.

Below is a transcript of the chat session.

Picerne: For those who aren’t familiar with our company, we pioneered the partnership-based, no cost housing solution. Over the last 10 years, we have successfully developed, constructed and managed some of the largest campus-style communities in the country.

Question: Hi, MHN! Looking forward to the chat with John Picerne; thanks for hosting it. I have two questions. They are: We’ve been hearing a lot about “micro housing,” city apartments of under 400 square feet for the last year. Do you see any role for these tiny units for student housing, and if so, what does that look like? And you have an amazing track record in philanthropy with Our Family for Families First. What motivates you to give back to the residents of your Picerne Military Housing communities?

Picerne: I could conceive of a use for micro apartments in certain applications like grad school, medical school—any academic environment where older students are spending more time in the classroom than in their homes, and where they have already built relationships and strong study habits. As to the philanthropy, we are a dual bottom line company. We believe that in order to achieve greater financial gains, we must continue to enhance society and those that we serve.

Question: Does Picerne have a department that evaluates and specifies products (specifically energy-saving products) for use in their new construction projects?

Picerne: Yes, our construction department evaluates all forms of new products for energy savings, environmental sensitivity and sustainability.

Question: I would like Picerne to consider our now patented and nationally distributed (CertainTeed) product. Who should I contact?

Picerne: Give Skip Kelleher a call at our headquarters in R.I.

Question: We will be in contact with him. Thanks, John!

Question: As you work with universities on possible projects, have there been any surprises so far in terms of their approach or what they are looking for from a private partner in housing? How would you compare it with working with the DoD?

Picerne: Actually, it’s quite similar to working with the DoD. Most colleges and universities are just coming to grips with the knowledge that their budgets are constrained and that their core focus is education and that housing is a support function. However, they are so used to running both that the struggle is allowing someone else to operate and plan for housing in the long run to be a compatible, competitive advantage for the schools.

Question: What are you seeing in the marketplace for student housing opportunities on campus? Are the smaller colleges and universities becoming interested in privatized housing? What is their motivation for doing so?

Picerne: We are seeing a growing trend towards smaller and mid-sized colleges focusing on greater efficiencies in dealing with budgeting challenges. We like to focus on long-term partnerships and differentiate from “privatization.” The motivation for schools to look at partnerships is to create a long-term sustainable program for their housing, as it has typically been second to strict educational and athletic facilities. As we’ve seen, many schools have extensive long-range for their primary facilities, but often don’t include housing.

Question: What is your role in student housing? Do you plan and build on-campus dorms, or off-campus units? Or is your role more in administering the housing, i.e., which students go where, maintenance scheduling, etc.?

Picerne: Our focus is primarily on-campus housing. We are a developer, constructor and property manager, and our focus is to provide schools with holistic housing solutions versus the current ad-hoc development. We work closely with the school in student placement and governance and do not replace them as administrators. Our role is to provide full housing solutions including new residence halls, renovating existing spaces and long-term planning for today and tomorrow’s housing needs.

Question: Compare the management intensity of student housing to that of regular “for rent” apartments. How important is it for an investor to pick a manager who not only has a great management track record, but a great track record in student housing as well?

Picerne: It’s almost impossible to compare student housing to market-rate conventional apartments. It is more akin to what we see in managing for military members. Colleges and universities run primarily on a nine-month basis, so transition of spaces is heavily intensified in the summer months. The military works on a similar schedule. Therefore, our unique capabilities have been homes from our 25,000-home, 65,000-bed military portfolio. I think conventional management companies would find it difficult to transfer into this type of rigor of scheduling.

Question: What do you bring to the student housing market that’s different from the long-established players?

Picerne: We actually believe that we compete in a completely different market. We understand that there are many companies developing, managing and investing in apartments geared to students living off campus. In a narrow focus, these companies focus on providing some relief to those schools that can’t adequately house their students. However, a long-term unintended consequence of this is that the older on-campus housing will not be able to compete with its off-campus counterparts, which will ultimately become the greater challenge for schools. They will struggle to achieve revenue sharing from their on-campus housing because of their competitive disadvantage. We have also seen a growing trend in on-campus ad-hoc or one-off residence halls being developed in various forms of partnership or privatization. Although these efforts again seem to help in the short-term, over the long haul they will foster a sense of the haves and the have-nots that will ultimately highlight potential conflicts of interest between the school and the developer. Our approach is to provide a long-term, holistic solution to the college’s student-housing needs. In partnership, we develop a common plan with the school to provide the optimum number of beds, as well as ongoing modernization, replacement and sustainability, ultimately enhancing the college’s long-term competitive advantage.

Note from the editor: Please note that information, such as names and locations, were omitted from the transcript to protect our readers’ privacy. Additionally, the questions and answers have been edited for spelling and grammar.

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