NYU Launches First Student-Led REIT Fund To Provide ‘Experiential Learning’
New York University is launching its own REIT Investment fund, aimed at offering its real estate students the chance to road-test investment ideas in real life.
The university’s School of Professional Studies Schack Institute of Real Estate announced the new venture on Wednesday, saying initial funding will come from sponsors of its REIT Symposium.
The fund will invest in U.S.-listed REITs only, as well as real estate operating companies and homebuilders. It won't use derivatives or incur leverage, and any earnings it makes will be reinvested into the fund. The fund will be operational in September, according to a statement from the Schack Institute, and trading and auditing compliance will follow. All roles will be held by students enrolled at the school, while industry leaders and professionals will make up the advisory board.
Scott Robinson, the director of the REIT center at Schack and an NYU clinical professor, said the fund is the first of its kind and will give the students experiences on the buy-sell side they typical would not experience in the first decade of their career.
“There's a number of MBA programs that do have securities and investment funds, there's probably half a dozen that I'm aware of, but there is no other real estate program that has a REIT-focused fund,” he told Bisnow in an interview.
No one will be taking any compensation from the fund, he said, but it will provide opportunities that are not available in traditional learning environments, particularly when it comes to decision-making based on analysis.
“There's going to be stumbles, they're going to make bad calls, they're going to misread the market,” he said. “I'm sure they're not going to be acting solely on their own, we're going to have an advisory board of industry professionals. The students are going to have to do a robust analysis and prepare a proper investment thesis before they get approval to make a trade. They're going to do all the legwork; making that decision is something you just can't learn in the classroom. So we're pretty psyched about that.”
Publicly traded REITs have been hit hard by the economic climate of recent years. Office-heavy firms like Boston Properties and SL Green are seeing the share prices drop as office leasing dips and concerns about a recession spread through the market. The banking crisis was felt keenly in the sector too, with the index that tracks all U.S. equity REITS experiencing deeper drops than the S&P 500 in the aftermath of the Signature and Silicon Valley Bank collapses.
"I love the public markets for real estate investing market because it's both transparent and liquid. But that cuts both ways," Robinson said. "[The students] are still young and they haven't been through a cycle, so it's going to be tough for them to make decisions. They're hearing a lot that office is horrible, but you have to get really granular in your analysis."
