Florida’s charter school real estate boom

2017-08-12

With the backing of Florida state leaders, the market for charter schools looks to expand with investors eager to get into the market. An industry that largely relied on rental properties to house teachers and students is now seeing opportunities for building ownership.

While considered public schools, charters are private managed and operate according to a contract with the local school boards. Each school has their own Charter Management Organization that oversees operations. Lately, those organizations have met with prospective real estate investors looking to assess their health and stability.

According to the Florida Department of Education, 654 charter schools in the state serve more than 282,000 students. The numbers are expected to grow as Governor Rick Scott signed an education bill that will convert 100 low-performing traditional public schools into charters.

Seventy-five million dollars funded the state's current roster of charter schools with the same amount divided among approximately 3,600 K-12 public schools. Critics see that as charters siphoning away funds from more traditional educational institutions. Supporters say that charter schools are booming for one simple reason. Parents want them.

Real estate investors play an important role in charter schools. Their financial largesse can replace the lack of state funding to build new schools. For start-up charters, construction is not the best use of their capital. Private financial backing can give charters the breathing room to spend available funds on teacher salaries instead of construction costs.

Charter schools may be entering a new era. Buying is replacing the common practice of renting. Previously, owners of rental properties found themselves with a building specially purposed for education after a charter school closed, a common fate for many of these institutions. Selling the customized property presented challenges.

Ownership of buildings affords charter schools the opportunity to buy back or refinance the properties, putting them on more sound financial footing to continue to do what they do best.

Posted on Real Estate Transactions