In 2013 Harry Smith, a wealthy businessman, Republican political donor—and at the time a member of the UNC System’s Board of Governors—formed a new company.
One month later, NWL-Collegiate Commons bought an apartment complex in Greensboro, near the North Carolina A&T State University campus, for $4.15 million.
Six years after that a real estate foundation tied to N.C. A&T—which was growing rapidly and faced a housing crunch—bought the complex for $12.35 million in a deal negotiated while Smith was chairman of the UNC System Board of Governors.
Smith’s lawyer said his client wasn’t involved in the negotiations leading up to the 2019 sale of Collegiate Commons. And the foundation’s executive director says she never spoke with Smith.
The price was in line with what the university’s foundation paid for another nearby apartment complex in 2019 as the university expanded student housing options.
But Smith’s involvement in the property wasn’t well known at the time.
Board ethics rules require members to avoid the appearance of impropriety, as well as any “business interest that may conflict with the member’s responsibilities.”
The sale is one of at least three housing deals involving state universities that Smith pitched, was accused of trying to steer toward a partner, or involved one of his companies during his time on the board, which has oversight over the university system’s 17 campuses, including N.C. A&T.
When WRAL News reached Smith seeking comment about the deal, he said he had contemplated legal action against WRAL over its previous coverage of him. He referred questions to his lawyer and demanded that he not be contacted again.
‘I’ve never talked to him’
Smith’s tenure as chairman was tumultuous. He left the Board of Governors near the time the N.C. A&T foundation deal closed, first announcing plans to step down early from the chairmanship and then later announcing plans to resign outright and focus on a private equity firm he’d founded.
Other board members told WRAL News they weren’t aware of Smith’s connection to the property at the time, and a University System spokesman declined comment on behalf of system leaders, including current Board of Governors Chairman Randy Ramsey.
“It would have raised some questions,” one Board of Governors member told WRAL News recently, requesting anonymity to discuss the issue candidly.
The N.C. A&T Real Estate Foundation, a nonprofit that buys and develops real estate near the university’s campus, said in a statement that the Collegiate Commons purchase “was consistent with all rules and regulations applicable to the foundation.” It was financed without taxpayer dollars, via bonds issued through the Public Finance Authority, a governmental entity in Wisconsin that issues debt for local governments and nonprofits around the country, the foundation said.
The foundation declined a WRAL News open records request for documentation of the sale, saying that, as a separate nonprofit, it’s not subject to open records requirements the university itself must abide by.
Foundation Executive Director Kimberly Cameron said in a statement that, to her knowledge, “at no time prior to or during the acquisition of Collegiate Commons did any member of the Foundation’s Board of Directors or I have any contact with Harry Smith.”
In a brief phone conversation, Cameron said she never felt pressure to make the deal with Smith. “I’ve never talked to him,” Cameron said. “I couldn’t even remember his name. And I’m the one that closed the deal.”
Through a spokesman, N.C. A&T Chancellor Harold Martin, who sits on the foundation board as well as leading the university, declined to discuss the purchase.
Smith’s lawyer, Mark Finkelstein, told WRAL News that the foundation reached out to The Preiss Co. about buying the complex in 2019. Preiss is a Raleigh-based real estate company that, according to state records, partnered with Smith in NWL-Collegiate Commons.
“The Foundation, not Harry, initiated the purchase process,” Finkelstein said in an email. “The Preiss Company, not Harry, negotiated with the Foundation.”
Discussions between the parties apparently lasted months, overlapping a portion of Smith’s final year on the board.
Finkelstein didn’t answer follow-up questions about whether Smith was consulted as The Preiss Co. and the foundation negotiated the deal, or what Smith’s ownership percentage was in the complex when the sale went through.
Donna Preiss, Preiss Co.’s chief executive, and other Preiss Co. executives didn’t return messages seeking comment.
Accusations at NCCU, ECU
Smith has been accused in recent years of trying to leverage his Board of Governors position in student housing deals. In 2018 a former North Carolina Central University vice chancellor said in a lawsuit against the university and its chancellor that Smith and two others tried to steer a student housing contract worth at least $90 million to The Preiss Co.
Smith and representatives of The Preiss Co., one of the country’s largest student housing providers, denied the accusation at the time. The lawsuit has since been settled, and the terms are secret, according to Katie Abernethy, the lawyer who filed the case on behalf of former NCCU vice chancellor Ben Durant.
The settlement terms don’t appear in the case file in Durham County. WRAL News requested the settlement terms from N.C. Central University, which is a public institution. The university acknowledged receipt of the request and said it would be reviewed.
Also in 2018, shortly before Smith became chairman of the Board of Governors, emails obtained through the state open records act revealed he had pitched top East Carolina University leaders on a foreclosed apartment complex that he considered buying as part of an investor group. Smith wanted to lease about half the complex beds to the university, which would rent the units to students, and increase demand by requiring sophomores to live in university housing, according to emails and ECU leaders who had discussed the proposal with Smith in 2016. The proposal was never consummated.
“He was thinking that, if he could get it at a steal and have a contract with ECU to fill the beds, he would split the profits with us,” Rick Niswander, then vice chancellor for administration and finance, wrote to Chancellor Cecil Staton in September 2016.
When WRAL News asked about it in 2018, Smith said he’d hoped the foreclosed complex could be a money-maker for the university, though he acknowledged he likely would have been part of the purchasing group.
“Lesson learned, but zero maliciousness in it,” he said at the time.
Lawyer says foundation reached out
Finkelstein said the N.C. A&T Real Estate Foundation reached out to a number of apartment complex owners in 2019 about purchasing buildings for student housing.
The foundation has spent the past few years buying apartments near campus to satisfy the housing need for the university’s growing enrollment, which swelled to a record 13,300 students this academic year.
Collegiate Commons was one of several complexes the foundation bought in 2019, and there’s no indication Smith had any ownership in the others.
For Collegiate Commons, Finkelstein said the foundation reached out to The Preiss Co., which had partnered with Smith through NWL-Collegiate Commons.
Finkelstein said The Preiss Co. handled negotiations and that the foundation paid market price. Cameron, the foundation’s executive director, said the price was based on an independent appraisal. She declined to provide the appraisal.
Finkelstein declined to say what Smith’s ownership percentage was when the sale was consummated, but Smith’s Statement of Economic Interest offers a clue. In a disclosure dated April 15, 2019, which covered calendar year 2018, he listed an 80% stake in a property in Greensboro. These forms require little detail beyond the city and county a property sits in, but Smith discussed this property with WRAL News in 2018, saying it was an apartment complex and that he wanted to sell it.
“I’m trying to completely exit [student housing],” Smith said at the time. “I’ve been trying to get out of the student housing business for some time.”
Price cheaper than construction
The foundation paid $12.35 million for Collegiate Commons, which had 108 units and 324 beds.
The price—nearly three times what Smith’s company paid in 2012—might be an eye-opener, but it could be justified considering the university’s need at the time and its wherewithal.
During the time Smith’s company owned the 108-unit property, enrollment at NC A&T increased by about 16%, meaning up to 1,700 more students were looking for places to live from 2012 until the time it was sold. During that period, average apartment rental rates in the Greensboro-High Point market climbed about 12%, according to a U.S. Department of Housing and Urban Development report that cited data from market researcher Reis Inc.
When demand and rental rates go up, properties are more attractive to investors, and universities are often willing to pay a premium for properties near campus. It’s often cheaper than building anew and it’s rare when they do go on the block.
The university paid about $114,000 per unit for Collegiate Commons, or $38,000 per bed.
Building new apartments at the time would have cost anywhere from $125,000 to $160,000 per unit, depending on the quality of construction, apartment developers told WRAL.
That same year the foundation bought Collegiate Commons, it also paid $32.5 million for 300 units with 840 beds at Sebastian Villages next door to Collegiate Commons, which works out to about $108,000 per unit, or $38,700 per bed.
Both complexes feature multi-bedroom apartments, and they rented out last year for an identical $3,447 per-bedroom, per-semester, according to the foundation’s website.
Negotiations overlapped Smith’s tenure
The Collegiate commons sale was finalized in December 2019. Finkelstein said in his statement that Smith left the Board of Governors about Oct. 1, 2019—“Well before the sale.”
But Smith’s resignation date was a moving target.
In September 2019, Smith announced plans to resign the chairmanship—but stay on the board—effective Oct. 1, 2019. Then, in early November of that year, he said he would resign from the board fully, effective Feb. 1, 2020.
Smith participated in the board’s meeting on Nov. 15, 2019. His actual resignation date, based on the Senate Resolution naming his replacement, was on or before Nov. 22, 2019.
The Collegiate Commons purchase agreement was dated Aug. 15, 2019, according to a notation in the state’s Comprehensive Annual Financial Report for that year, which also notes an initial deposit of $247,000 had been made on the deal.
An NC A&T Board of Trustees resolution dated Sept. 27, 2019, indicates the university board voted that month to authorize A&T officials to execute any documents needed to finalize the purchases of Collegiate Commons and Sebastian Village. That resolution also asked the Board of Governors to “take any and all such actions” needed to consummate the transactions.
It’s not clear what actions the Board of Governors took, if any, but the next Board of Governors meeting was in November. It was Smith’s last meeting on the board.
Nothing in that meeting’s minutes indicates the Board of Governors voted on the Collegiate Commons deal.
WRAL State Government Editor Jack Hagel contributed to this report.
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