Real Estate Investors Jump Into Charter $chool Market, See Large Annual Profits

Diane Ravitch's blog

A report in the Wall Street Journal describes the gold-rush atmosphere that attracts real estate investors to charter schools. The risk in the investment is diminished because the schools have a steady stream of government funds. The charters are almost always non-union. The biggest risk is that the people running the schools are unqualified to run a school and the school may fail.

Real-estate investors are showing an increasing interest in charter school development as the demand grows for classroom seats and some state and local governments become more willing to help finance charter-school projects.

Almost all charter schools are operated by nonprofit organizations. But these groups often rent and buy their buildings from private real-estate developers, and that is creating a new niche asset for some investors.

One of the latest entrants to the charter real-estate business is Northstar Commercial Partners, a Denver-based private-equity firm that is raising a…

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