138 Student Living, UWI agree new concession terms

Student housing developer and operator 138 Student Living Jamaica, 138SL has agreed new terms with the University of the West Indies, Mona, details of which will be published in the company’s upcoming annual report.

After months of negotiations, Student Living and UWI Mona signed off on a heads of agreement during the July-September quarter under their long-term partnership, which has been in effect since 2014.

“We would like to have the discussions of the meeting circulated through the community first to give them a chance to review, after which we should be able to speak more freely about it,” said Student Living Chairman Ian Parsard.

The heads of agreement is said to cover issues relating to claims for accommodations provided to Irvine Hall students up to July 31, 2021, revision of the 2015 UWI/138SL concession agreement, and other items involving services UWI provides to 138 Student Living.

The company’s initial agreement with UWI – the 2014 Concession Agreement – required 138SL to design, finance, construct, and operate 2,306 units for student accommodation. Under that concession agreement, the UWI has guaranteed a minimum of 90 per cent occupancy of available rooms in any 51 weeks period for as long as the concession agreement is in place, which is currently estimated to be a minimum of 30 years and a maximum of 65 years.

The student housing developer, through 138 SL Restoration, later expanded its arrangement with the UWI Mona, with another 30-year concession agreement to finance, build, and operate an additional 72 student residences on Gerald Lalor flats as well as to operate the rebuilt Irwin Hall, which currently has 384 rooms.

Under the second concession agreement, the UWI has also guaranteed a minimum of 90 per cent occupancy of available rooms.

But in August, 138SL told shareholders that it was renegotiating the 2015 agreement, saying that it has been been a source of friction between the parties due to a change in building renovation works, which, in turn, affected the number of residences and students housed.

“The 2015 agreement has been the most problematic. There is a commitment by both parties to revise the financial model so that it reflects what’s constructed on Irvin Hall. But our relation with UWI is much broader than that,” Parsard said.

Amid the fallout in occupancy levels and revenues, a direct result of the shift towards off-campus learning under the pandemic, the company also faced challenges with its debt repayments but got some relief after bondholders approved a 12-month reprieve on principal repayments while Student Living worked to sustain the business during the health crisis.

The company’s profit was also badly hit by the suspension of face-to-face classes at the university. Earnings declined by 23 to $244.5 million at year ending September 2021, on the back of a 33 per cent decline in revenue to $813 million.

Student Living’s renegotiated agreement with the UWI should improve revenue for the company for FY2022, but outside of that, the student housing provider is once again looking to generate income from short-term rentals, especially when students are off campus on holiday breaks.

The company recently hired a marketing manager to secure more bookings from business and conference groups and is so far reporting that a number of bookings for early 2022.

karena.bennett@gleanerjm.com