University of Michigan invests up to $30M in Detroit-based real estate fund By Matthew Dolan and David Jesse
The University of Michigan Board of Regents approved a rare investment of up to $30 million in a Detroit-based real estate fund Thursday afternoon. Board members made no comment on the investment during the meeting.
Detroit Renaissance Real Estate Fund invests in single and multifamily properties in the metro Detroit area, according to university documents. Fortus Partners, the general partner for the fund, was cofounded by Corey Hanker and Jordan Friedman in 2011. Hanker graduated from U-M in 1997 with a degree in economics.
The investment comes in the wake of a Free Press investigative series published earlier this month that found that since 1998, the U-M endowment — now valued at $11.6 billion — has sent only $40 million to a single Detroit-based fund and no other.
Hanker said his firm first approached the university about investing in the Fortus’ Detroit-focused fund in December 2016. The fund hopes to raise up to $100 million to invest in and rehabilitate metro Detroit housing, he said.
“We’re honored and excited to have the University of Michigan as a partner,” Hanker said in an interview Thursday. He added that his pitch to university investment officials touted “a great opportunity in its own backyard.”
He declined to discuss the expected profit margin for the fund and the fees his fund would charge to manage the university’s investment.
Fortus' “strategy is to purchase, renovate, and rent single-family and multifamily homes in the Detroit metro area, which includes Oakland, Macomb, and Wayne counties. Fortus targets undervalued homes that are typically two to three bedrooms and require varying degrees of renovation,” according to the university’s summary of the proposed investment.
In response to the Free Press series, the university argued that it does invest in Michigan through other funds not necessarily based in the state. Still, the total size of those investments largely pales in comparison to those made in many other funds based in other cities around the world, including Boston, London, Hong Kong and Beijing, according to a review of publicly available documents.
In an interview last year, U-M President Mark Schlissel said "I don’t think the endowment investing strategy is targeted in any special way to Michigan and nor do I really think it should be."
U-M only offers scant details to the public about its endowment investments. It does not routinely disclose the projects supported by the funds that receive university investments. The university also does not disclose the total fees paid to funds to manage its money or whether those funds are run by significant donors to U-M, according to the Free Press investigation.
Other university documents released this week show that in July 2017, the university committed an additional $10 million to SSG Capital Partners IV. It was not immediately clear why it took the university’s investment office more than six months to disclose the follow-on investment to the Regents.
U-M graduate Edwin Wong is managing partner and chief investment officer of SSG Capital Management, a firm with more than $4 billion in assets under management. In December 2016, Michigan pledged to invest up to $70 million in two Hong Kong-based investment funds run by Wong. (In a recent e-mail, Wong said the university's total investment is $50 million.) One month after the university's investment commitment, according to donation records, Wong contributed $100,000 to the Stephen M. Ross School of Business Edwin Wong Scholarship Fund. Records show he had never made a significant gift before to U-M, a fact Wong confirmed.
In separate interviews, university officials and Wong said there was no connection between the university's multimillion-dollar investments and the timing of Wong's first substantial alumni contribution.
See Full Article