Charter School Campuses Are Opportunity for CRE Investors

The emerging trend of converting industrial and commercial space to charter school campuses is giving investors an alternative to typical CRE investment strategies. Among other joint ventures that will transform space formerly used for factories or office buildings, a joint venture of Canyon Capital Realty Advisors LLC and several business partnerships of Andrea Agassi stands out. It has been developing a Milwaukee property that was formerly a steel plant to lease it to Lighthouse Academies of Wisconsin Inc. for a charter school that is set to open in mid-2012. The Canyon-Agassi real estate fund has already done one warehouse conversion in Philadelphia and is considering school projects in other U.S. cities.

The demand for charter schools has attracted joint venture funds and companies that wish to be part of a movement that could be lucrative as the number of charter schools in need of campuses rises. Washington, D.C., advocacy group National Alliance for Public Charter Schools says that more than 500 charter schools opened last year, bringing the U.S. total to about 5,600. Charter school campus investors buy or develop properties and get income from renting to companies that operate the schools.

Real estate experts said that charter schools could be a substantial portion of the market, with more than 400,000 children nationwide on waiting lists for the schools. Demand has increased as parents seek alternatives to traditional public schools. Charter schools charge no tuition and receive funding from municipal, state, and federal tax dollars and operate under a charter that’s granted by the state or a local authority.