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Education Business: Aventura Investor Focuses on the Real Estate of Schools

Matthew Fuller

Matthew Fuller, chief investment officer with ESJ Capital Partners. Courtesy photo

Real estate investor ESJ Capital Partners focuses on office space, entertainment and hospitality but is expanding an asset class — charter school buildings.

"Education infrastructure is a growing niche nationally," said chief investment officer Matthew Fuller.

ESJ, which has been investing in school buildings for 10 years, most recently sold two charter K-8 schools it developed with general contractor MG3 Developer Group LLC for a total of $44.99 million to affiliates of Charter Schools USA, a for-profit charter school manager. The deal closed March 22.

Aventura-based ESJ, which also has an office in Luxembourg to serve European investors, and MG3, a Hollywood-based real estate investment company that builds and manages properties, developed Renaissance Charter School at Wellington and Renaissance Charter School at Goldenrod in Orlando,

The schools were finished in August 2015, and ESJ and MG3 leased them to Charter Schools USA.

"We simply own the walls," Fuller said.

The 66,000-square-foot school in Wellington sold for $23 million, and the 79,600-square-foot, two-story school in Orlando sold for $21.9 million.

Charter schools receive government funds but are run by private parties independent from public school districts where they are located.

In the past 10 years, ESJ, which was the equity partner in the joint venture that developed the two schools, has invested in 54 private and charter schools across nine states, Fuller said.

Generally, ESJ doesn't sell them right away but rents them to school operators until the schools gain momentum in the community and on enrollment.

"Rarely will we ever see a school open with 1,000 students day one, for example. Typically, you want to be able to grow. Maybe you start with 600 in year one, grow to 750 year two, 900 year three, 1,000 year four," Fuller said, noting ESJ isn't a merchant builder.

Some charter school operators are nonprofits and qualify to buy the school with tax-exempt bonds.

"In many cases, it could be a municipally funded asset. And we have had many of our charters buy the facilities back from us via tax-exempt bond financing," Fuller said.

He declined to give the exact development costs for the two schools but said the average building cost is about $16 million.

"Many times these schools are under-capitalized and unable to build their own facility. We are a partner in that regard," Fuller said.

Aside from charter schools, the company also invests in Montessori and arts-focused schools. ESJ's other schools include the 46,000-square-foot Plantation Charter School, the 54,000-square-foot Boynton Beach Charter School and the 64,000-square-foot Coral Springs Charter School, according to its website.

"We think we can bring in a superior facility to the market relative to any of the district schools and allow schools to bring different programming specific to curriculum," Fuller said.

Schools comprise about a third of ESJ's investment portfolio. It also has about 1 million square feet of office space, and builds and owns hospitality venues. It also owns Jungle Island in Miami and last August got voter approval to extend its lease and build a hotel on the site.