Major Madison property owner Steve Brown reportedly agreed to sell his five private residence halls to a multi-billion-dollar Texas-based real-estate company for an estimated 60 to 65 million dollars.
A Steve Brown Private Residence Hall employee who asked to remain anonymous said executives for FirstWorthing, which owns several residence halls in college towns nationwide, visited Madison last week inspecting Brown’s properties before signing papers to make the purchase final. The sale would include Brown’s high-rise properties Highlander, Statesider, Langdon and the recently acquired Towers and the Regent.
The sale will be finalized in a matter of weeks, according to the employee.
“They’ve expressed a strong enough interest to put down several hundred thousand dollars,” he said, adding that FirstWorthing agreed to a “due diligence” period in which they put money down to act as a deposit before formally buying the properties.
The takeover could spawn a number of significant renovations and changes to the private dorms. FirstWorthing reportedly plans to pour millions of dollars into its new acquisitions to keep the Private Residence Halls competitive with the university’s new housing. Steve Brown Apartments officials said they have conducted talks with FirstWorthing but would not confirm the sale.
“We’ve had contact with FirstWorthing. They have been investigating our operations, particularly our residence halls,” Scott Watson, controller of Steve Brown Apartments, said. “We are exploring strategic alliances.”
FirstWorthing did not return phone calls.
Brown, owner of Steve Brown Apartments and the Private Residence Halls, has been a vocal opponent of the University of Wisconsin’s Master Plan to expand public housing. He maintains the planned UW “luxury” residence halls would hamper the ability of private landlords to compete in the student-housing market.
Brown is reportedly worried the new construction would deplete the student base needed to fill his halls.
However, the company’s officials maintain that Steve Brown Apartments will remain a presence in the university property market for a long time.
“We are going to stay in the Madison residence-hall business for the foreseeable future,” Watson said.
However, the Private Residence Halls employee said Brown would sell all five of his dorms as an entire package to preclude him from losing money once the new UW halls are built. Nevertheless, Brown will likely stay on as manager of the property he once owned.
“As far as Steve himself intends, he is honestly and truly seeking this management contract,” the employee said, adding workers for all five dorms would likely have the chance to stay on even when ownership of the property changes hands.
Lease and apartment charges, however, could be subject to change.
Paul Evans, head of University Housing, said he had heard Brown’s dorms were on the market, possibly due to worries he would lose money as a result of the new university project.
“He has a number of first-year students that live [in Steve Brown’s halls],” Evans said. “And I think he is worried what will happen if we guarantee these students housing. There would be fewer first-year students living in his apartments.”
Evans said though the first phase of university dorm construction, taking place on Park and Dayton streets, would not affect Brown’s holdings, he admitted the long-term projections aimed at adding 700 to 800 additional beds in UW housing could strike a significant dent in the Private Residence Halls’ profits.
“I understand why he will be concerned when we get larger,” Evans said.
