Students at Indiana University’s Kelley School of Business create a $4.2 million real estate private equity fund

Newswise — BLOOMINGTON, Indiana — Students at Indiana University’s Kelley School of Business have raised $4.2 million to create a real estate private equity fund that they and their future peers will manage and use to make investments into existing and future developments.

It’s called Sample Gates Management Inc. and is the largest student-managed real estate private equity fund in the country by dollars raised. More than three dozen real estate and finance companies and individual investors, including Kelley alumni, were among the early investors in the fund, which was created entirely through an offering that closed in late December.

“We want to make it clear that this is investment money and not donations,” said Doug McCoy, director of real estate for Al and Shary Oak, a teaching professor of finance who directs Kelley’s Center for Real Estate Studies. “Our students will turn around and invest in real estate transactions under the guidance of an investment committee and faculty. These transactions are rigorously reviewed by practicing, respected professionals who are alumni and investors in the fund.

“This is something that we hope will continue to be successful for decades to come, and we believe it will be a big part of our students’ development. This is the heart of our real estate program. We have broken down the wall between academia and practice, and this integration of the two allows our students to graduate as seasoned professionals.”

The fund emerged from a student initiative after a three-year process. Patrick Engels, a 2021 Kelley alumnus who now works as an analyst at a New York investment management firm, approached professors in the school’s real estate program during his freshman year. The idea was further developed through the leadership of alumni such as early supporter J. Timothy Morris, founder and partner of Proprium Capital Partners. Faculty Advisor Tom Peck is also Chief Investment Officer of the Hageman Group.

“That’s what makes this so amazing,” said Will Huber, student president of the IU real estate private equity program and a senior from Batavia, Illinois, majoring in finance and real estate. “We’re one of the few programs like this that’s run by students, and we’ve raised our own money.”

“Most of our investors are IU alumni who support the program and give us an experience and responsibility that few students like us can have. These people are CEOs and Presidents of these companies. The fact that they have responded with great interest in us and wanted to participate in our pitches and learn more about the program is so encouraging.”

Student-run private equity funds are more common at the graduate level, where funding often comes from the university or an individual donor rather than investors. Unlike funds tied to courses that make investment recommendations once a semester, the Sample Gates Management fund is more fluid as students manage wealth, make investments, and raise capital throughout the year – all under the direction of the Fund Investment Committee and Kelley Faculty Advisors .

During that year, students introduced and met with potential investors at events in Chicago and Indianapolis. McCoy said the overall experience, which includes gaining a working knowledge of securities laws and customer management, makes Kelley graduates attractive to top companies.

“It’s such an immersion in this whole world of real estate private equity that sets us apart from other programs across the country and brings people to Kelley,” McCoy said. “This is about the students; this is about learning; This is about the marketplace and they can end up in all the best places.” McCoy said the students’ success with the Sample Gates Management Fund indicates a growing interest in studying Kelley real estate in Bloomington and Indianapolis. This fall, 380 students are majoring in real estate at Bloomington, including 115 students who have made it their only major. In Indianapolis, 72 students are studying real estate together, including 31 in a new Commercial Real Estate Workshop. In December, the Indiana Commission for Higher Education approved a 15-credit-hour undergraduate real estate certificate program at IUPUI beginning in fall 2023.

The Real Estate Club in Bloomington has seen an increase in student interest, doubling from 250 members to almost 500 this fall. From there, students can apply to attend the Commercial Real Estate Workshop and then work on the fund.

“I wanted to be able to generate wealth but also make a difference in the communities where we invest,” said Maliq Carr of Indianapolis, co-president of the real estate club and a senior specializing in finance. “When you build a new apartment complex, mall, mall or industrial building, you create jobs and you really make the area a better place. Investing properly in real estate can have a positive impact on many people’s lives. That’s what attracted me to real estate.”