Key Takeaways
- • Indiana University's Kelley School of Business undergraduate students launched the $4.2 million Sample Gates Management LLC private equity real estate fund, which the school says is the largest undergraduate student-managed real estate private equity launch in the country by money raised.
- • The fund closed fundraising on Dec. 31 as a 10-year closed-end vehicle with a four-year investment window, with 42 individuals and 44 entities invested, according to student president Will Huber.
- • Individual contributions ranged from $25,000 to $300,000, with an average between $100,000 and $150,000, and many investors are IU alumni in real estate.
- • The fund plans an 8 percent preferred return to investors, with a fund-level target in the mid-teens, and will focus on value-add multifamily, with 8 to 12 deals expected at average sizes of $300,000 to $500,000.
- • Most investments will be limited-partner interests in syndications, with the program intended to give students underwriting experience that is typically required for private equity roles after two years as analysts.
Summary
Indiana University undergraduate students at the Kelley School of Business have launched Sample Gates Management LLC, a $4.2 million private equity fund investing in commercial real estate. According to the Kelley School, it is the largest undergraduate student-managed real estate private equity launch in the country by money raised. Marquette University launched what was described as the first undergraduate real estate investment fund in 2021 with $1 million, and comparable programs have typically operated at the graduate level with school funds or angel investors.
The fund was developed over roughly three years, beginning with a suggestion from Patrick Engels, a 2021 Kelley graduate now an analyst at a New York investment management firm. J. Timothy Morris, founder and partner of Proprium Capital Partners, helped develop the concept, and Tom Peck, chief investment officer at Hageman Group, serves as faculty advisor. Doug McCoy, the Al and Shary Oak Director of Real Estate and director of the Center for Real Estate Studies, led the effort. The fund required approval from the university president and the IU board of trustees, and forming a separate entity to shield the university from liability was a key hurdle, according to McCoy.
Students raised capital during the fall semester through pitch events in Chicago and Indianapolis, the latter attended by more than 200 people at the IU Center for Real Estate Studies fall luncheon. Will Huber, student president of the program, said 42 individuals and 44 entities have invested, many of them family trusts or LLCs. An investment committee of the largest investors must approve deals. Sixteen students oversee the fund and meet twice weekly, with Peck providing professional oversight.
The fund plans to deploy capital primarily as a limited partner in syndications, with possible co-GP arrangements and mezzanine or preferred equity positions. Huber said most pipeline deals involve value-add multifamily, rehab, and light industrial projects in the Midwest and Sun Belt, with some interest in self-storage, affordable housing, and hospitality. The fund targets an 8 percent preferred return to investors and a mid-teens fund-level return. Huber described the strategy as deliberately broad to leverage IU alumni relationships for off-market opportunities, while noting the group is cautious given what it called a volatile environment. The first investment committee meeting was scheduled for Jan. 26.
The fund was developed over roughly three years, beginning with a suggestion from Patrick Engels, a 2021 Kelley graduate now an analyst at a New York investment management firm. J. Timothy Morris, founder and partner of Proprium Capital Partners, helped develop the concept, and Tom Peck, chief investment officer at Hageman Group, serves as faculty advisor. Doug McCoy, the Al and Shary Oak Director of Real Estate and director of the Center for Real Estate Studies, led the effort. The fund required approval from the university president and the IU board of trustees, and forming a separate entity to shield the university from liability was a key hurdle, according to McCoy.
Students raised capital during the fall semester through pitch events in Chicago and Indianapolis, the latter attended by more than 200 people at the IU Center for Real Estate Studies fall luncheon. Will Huber, student president of the program, said 42 individuals and 44 entities have invested, many of them family trusts or LLCs. An investment committee of the largest investors must approve deals. Sixteen students oversee the fund and meet twice weekly, with Peck providing professional oversight.
The fund plans to deploy capital primarily as a limited partner in syndications, with possible co-GP arrangements and mezzanine or preferred equity positions. Huber said most pipeline deals involve value-add multifamily, rehab, and light industrial projects in the Midwest and Sun Belt, with some interest in self-storage, affordable housing, and hospitality. The fund targets an 8 percent preferred return to investors and a mid-teens fund-level return. Huber described the strategy as deliberately broad to leverage IU alumni relationships for off-market opportunities, while noting the group is cautious given what it called a volatile environment. The first investment committee meeting was scheduled for Jan. 26.
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