The students are back and they are ready to roll!
The level of enthusiasm for the flagship Real Estate Private Equity (REPE) Program continues to grow and expand. Four years ago we started the program with 15 students and thought that we would keep enrollment to 21 (seven teams of three to cover all regions of the U.S.) and have since expanded enrollment to 32 (seven teams of four and an eighth team for special projects).
Regrettably, we had to turn away a half-dozen student interested in the REPE track. The passion for REPE grows out of the student requirement to analyze and underwrite live real estate private equity investment opportunities, interact with the 13 member Wisconsin Real Estate Alumni Association (WREAA) Investment Committee (chaired by Brian Eisendrath), and receive regular guidance from the three general partners representing the WREAA Funds I and II (led by Jeff Rotter).
The REPE has a dual focus of: (1) Obtaining 12-18% investor returns on the WREAA Fund I and II portfolios, and (2) Prepare students that are client-facing ready to work in real estate private equity and related organizations.
As many of you know, WREAA raised $3.0 million for WREAA Fund I and $4.6 million for WREAA Fund II. WREAA Fund I is fully invested in eight assets, two were harvested with 76% and 12% IRRs. As might be expected with value-add investments made in 2021 and 2022, a number of the remaining mainly multifamily assets are struggling under the weight of significantly higher interest rates, outsized construction cost increases, and softening rental growth. The March 2024 student-led asset management reports revealed that expected portfolio IRRs fell to 8.8% from the originally underwritten 15.2%.
WREAA Fund II has currently invested $1.8 million in five assets, four multifamily and one industrial. Expected IRRs are within 50 basis points of when they were originally underwritten in the mid-13% range for the five investments. We NEED your assistance to deploy the remaining $2.5 million (we will maintain $300,000-450,000 in capital call reserves) in the 2024-25 academic year. Please send me your equity offering memoranda or inquire about our investment criteria at mark.eppli@wisc.edu.
We have a one-of-a-kind program in the real estate private equity program. The twelve-credit sequence puts the students through a rigorous underwriting and modeling process, prepares students to present investment opportunities like the best in the business, and follows those investments through providing ongoing asset management reports to the
WREAA Fund investors. There is no other university that requires the students to fully underwrite and manage the private equity real estate investment process like the one in the WSB. None.
WREAA and Graaskamp Center leadership team have much to be proud of. In 2019, then WREAA President Jim Roemer and his leadership team were clear-eyed in the need to have students that were the best trained as the best in the nation and hatched the idea of a real estate private equity fund.
Mike Brennan and I focused on the student learning outcomes to prepare students for the real estate private equity industry where Mike used his vast professional connections to insure that the students would be tasked with a rigorous curriculum that required they learn all aspects of the real estate private equity organization by providing the many insights and proprietary information used by Brennan Investment Group.
The leadership baton is now being passed on to the second generation of WREAA and Center talent. Jeff Rotter has filled Jim’s “big shoes” as the lead voice of the fund’s GP providing wonderful guidance to the students and WREAA Fund investors. We are currently in the process of constructing the position description for REPE teaching role that Mike Brennan played and will hire his replacement by the end of the calendar year. Finally, the continue stalwart efforts of the WREAA Investment Committee members, under the extraordinary and patient leadership of Brian Eisendrath, provides both a wonderful learning opportunity for the students and great investment platform for program alum investments. Forward!