Charter School Investment Has Risks and Rewards for Property Investors
Bloomberg BusinessWeek reports: A warehouse where workers once shaped and cut steel on Milwaukee’s north side is getting a second life. It’s being transformed into a charter school that’s scheduled to open in August.
A joint venture of Canyon Capital Realty Advisors LLC and former tennis champion Andre Agassi’s business partnerships is developing the property and will lease it to Lighthouse Academies of Wisconsin Inc. The Canyon-Agassi real estate fund has done one warehouse conversion in Philadelphia and is considering school projects in other U.S. cities, including New York and Houston.
Entertainment Properties Trust and Inland Public Properties Development Inc. also are among companies that are investing in buildings for charter schools as demand for campuses grows. More than 500 of the schools opened last year, bringing the U.S. total to about 5,600, according to the National Alliance for Public Charter Schools, a Washington-based advocacy group. The investors buy or develop properties and get income from renting to companies that operate the schools.
For Entertainment Properties, the charter-school investment yield is 9 percent to 10 percent, according to Keith Bokota, an analyst at Principal Global Investors. That compares with November’s 7 percent average capitalization rate for commercial property deals of more than $5 million, according to global commercial property research firm Real Capital Analytics Inc.
Leasing properties can entail risk because schools may be shut down for reasons including poor student achievement, low enrollment and financial troubles. About 150 U.S. charter schools didn’t reopen this academic year, according to the charter-school alliance.
View the full article on Bloomberg BusinessWeek: Charter School Investment Has Risks and Rewards for Property Investors
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Posted by: Nina Turner