Liberty University has purchased 19 residence halls, a clubhouse and gym on Campus East for $20.5 million.
Liberty originally sold the 26-acre tract to Bostic Development in 2003, with a contract to build residence halls and lease the units to the university. The term of the lease was 40 years but LU had the option to purchase the property after five. According to Chancellor Jerry Falwell, Jr., at the time Bostic was one of the largest developers of residential properties for colleges nationwide.
The Campus East Phase 1 purchase will save the university more than $2.5 million per year in lease payments, Falwell said.
Charles Spence, LU’s director of planning and construction, said owning the property made sense, with the tract surrounded by property already owned by Liberty. There are 30 buildings on Campus East; Liberty already owned 11, built in 2005 and 2006.
“We really needed that property to make our property continuous,” he said.
It will also make it easier for Liberty to plan for future development of residence halls on and near that property and to allow for needed upgrades to the existing buildings.
“We can really afford to spend money enhancing the buildings now that we own the facilities; we can modify the buildings with tighter security controls and better energy management upgrades,” Spence said.
Falwell recalled the moment Liberty began negotiations with Bostic:
“Dad and I were watching one of my boys play little league football one afternoon in 2002. The year before, Dad had begun to focus all of his attention on expanding enrollment at Liberty. He commented to me that the growth was exceeding his expectations and that there were simply not enough dorms on campus to house all the new students. Bostic Development had been negotiating with Liberty to purchase land to build apartments to rent to the public so I called Bostic officials on my cell phone from the football game. They were immediately excited about the opportunity to work with LU.”
Negotiations were completed within a month or two and the project was soon under construction, he said. Bostic provided not only the construction but also the financing for the student housing by leasing the buildings back to LU.
“Our options for financing were limited in those days so I am not sure LU could have expanded without this special lease arrangement,” Falwell said. “The first time I ever addressed the LU student body was to announce the plans for the new apartments in convocation in 2003.”
Eventually, Bostic encountered financial difficulties after the apartments were built because of cost overruns, but Falwell said the university “appreciates the fact that Bostic honored all of its contractual obligations to LU even though the arrangement was not nearly as profitable for Bostic as it had hoped it would be.”
Liberty closed on the property on Monday, June 29.