Key Takeaways
- • University of Michigan Board of Regents approved an investment of up to $30 million in Detroit Renaissance Real Estate Fund, marking a rare direct commitment to a Detroit-based investment vehicle as of February 2018.
- • Detroit Renaissance Real Estate Fund, managed by Fortus Partners (cofounded by Corey Hanker and Jordan Friedman in 2011), targets acquisition and renovation of single- and multifamily residential properties across metro Detroit counties including Wayne, Oakland, and Macomb.
- • The fund seeks to raise up to $100 million total and focuses on undervalued two- to three-bedroom homes requiring renovation, with a strategy to purchase, rehabilitate, and lease properties across the Detroit metropolitan area.
- • The investment follows a Detroit Free Press investigative series revealing that since 1998, the university's $11.6 billion endowment had directed only $40 million to Detroit-based funds, prompting scrutiny of the institution's local investment commitment.
- • Corey Hanker, a 1997 U-M economics graduate, pitched the opportunity to university investment officials in December 2016 as "a great opportunity in its own backyard," with the firm's approach beginning formal discussions approximately 14 months prior to board approval.
Summary
The University of Michigan Board of Regents approved an uncommonly direct institutional investment of up to $30 million in Detroit Renaissance Real Estate Fund on February 15, 2018. The investment represents a strategic pivot toward localized capital deployment, targeting residential real estate opportunities within the Detroit metropolitan region—a notable shift for an endowment valued at $11.6 billion.
Detroit Renaissance Real Estate Fund operates under Fortus Partners, a general partner established in 2011 by Corey Hanker and Jordan Friedman. Hanker, who earned his economics degree from the University of Michigan in 1997, spearheaded the firm's outreach to university investment officials beginning in December 2016. The fund's investment thesis centers on acquiring and renovating undervalued single-family and multifamily residential properties across Wayne, Oakland, and Macomb counties. Target assets typically range from two to three bedrooms and require varying degrees of renovation work before being placed into rental portfolios.
The broader fund aims to raise up to $100 million in total capital commitments to execute its Detroit-focused residential strategy. Fortus Partners declined to disclose expected profit margins or management fee structures associated with the university's commitment, citing competitive considerations.
The U-M investment arrives in the context of increased institutional scrutiny regarding endowment deployment in home markets. A Detroit Free Press investigative series published earlier in February 2018 found that the university's endowment had historically directed minimal capital to locally based funds—only $40 million to a single Detroit-based fund since 1998. In response, university officials emphasized that Michigan-focused investment also occurs through non-state-based funds, though the $30 million direct commitment to a Detroit Renaissance vehicle signals enhanced commitment to regionally concentrated real estate development.
Detroit Renaissance Real Estate Fund operates under Fortus Partners, a general partner established in 2011 by Corey Hanker and Jordan Friedman. Hanker, who earned his economics degree from the University of Michigan in 1997, spearheaded the firm's outreach to university investment officials beginning in December 2016. The fund's investment thesis centers on acquiring and renovating undervalued single-family and multifamily residential properties across Wayne, Oakland, and Macomb counties. Target assets typically range from two to three bedrooms and require varying degrees of renovation work before being placed into rental portfolios.
The broader fund aims to raise up to $100 million in total capital commitments to execute its Detroit-focused residential strategy. Fortus Partners declined to disclose expected profit margins or management fee structures associated with the university's commitment, citing competitive considerations.
The U-M investment arrives in the context of increased institutional scrutiny regarding endowment deployment in home markets. A Detroit Free Press investigative series published earlier in February 2018 found that the university's endowment had historically directed minimal capital to locally based funds—only $40 million to a single Detroit-based fund since 1998. In response, university officials emphasized that Michigan-focused investment also occurs through non-state-based funds, though the $30 million direct commitment to a Detroit Renaissance vehicle signals enhanced commitment to regionally concentrated real estate development.
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