Kelley students establish $4.2 million real estate private equity fund: IU News

BLOOMINGTON, Ind. — Students at the Indiana University Kelley School of Business have raised $4.2 million to establish a real estate private equity fund that they and their future peers will manage and use to make investments in existing and future developments.

Called Sample Gates Management Inc., it is the largest undergraduate student-managed real estate private equity fund launch, measured by dollars raised, in the country. More than three dozen real estate and financial firms and individual investors, including Kelley alumni, were among the initial investors in the fund, which was created entirely through an offering that closed in late December.

“We want to make it clear that this is investment money, not donations,” said Doug McCoy, the Al and Shary Oak Director of Real Estate, a teaching professor of finance who directs Kelley’s Center for Real Estate Studies. “Our students will turn around and invest in real estate transactions under the guidance of an investment committee and faculty. These transactions are heavily vetted by practicing, esteemed professionals who are alumni and investors in the fund.

Kelley students who helped establish the Sample Gates Management Inc. fund, with Doug McCoy, the Al and Shary Oak Director of Real Estate...Kelley students who helped establish the Sample Gates Management Inc. fund, with Doug McCoy, the Al and Shary Oak Director of Real Estate, a teaching professor of finance and director of the Center for Real Estate Studies. Photo by the Kelley School of Business

“This is something that hopefully succeeds for decades, and we believe it will be a big part of our students’ development. This is something at the heart of our real estate program. We’ve removed the wall between academia and practice, and that integration of those two allows our students to graduate as experienced professionals.”

The fund emerged from a student initiative after a three-year process. Patrick Engels, a 2021 Kelley alumnus now working as an analyst at a New York investment management firm, approached professors in the school’s real estate program during his freshman year. The idea was further developed through leadership from alumni such as early supporter J. Timothy Morris, founder and partner of Proprium Capital Partners. Faculty advisor Tom Peck also is chief investment officer at Hageman Group.

“That’s what makes this so amazing,” said Will Huber, student president of the IU real estate private equity program and a senior from Batavia, Illinois, majoring in finance and real estate. “We are one of the few programs like this that are run by undergrads, and we raised our own money.

“Most of our investors are IU alumni who support the program and are giving us an experience and responsibility that few students like us can have. These people are CEOs and presidents of these companies. The fact that they responded to us with high interest and wanting to attend our pitches and learn more about the program is so encouraging.”

Student-run private equity funds are more common at the graduate level, where funds often come from the university or a single donor instead of investors. Unlike funds tied to courses where investment recommendations are made once a semester, the Sample Gates Management fund is more fluid, with students managing assets, making investments and raising capital year-round — all under the guidance of the fund’s investment committee and Kelley faculty advisors .

This year, students pitched prospective investors at events in Chicago and Indianapolis and met with them individually. McCoy said the overall experience, which also includes gaining real-world knowledge of securities laws and client management, makes Kelley grads attractive to top firms.

From left: J. Timothy Morris, founder and partner of Proprium Capital Partners; Patrick Engels, a 2021 Kelley alumnus who came up with th...From left: J. Timothy Morris, founder and partner of Proprium Capital Partners; Patrick Engels, a 2021 Kelley alumnus who came up with the idea for the fund; Doug McCoy, the Al and Shary Oak Director of Real Estate and a teaching professor of finance; and Tom Peck, faculty advisor and chief investment officer at Hageman Group. Photo by the Kelley School of Business

“It’s such an immersion into this whole world of real estate private equity that sets us apart from other programs around the country and is bringing people into Kelley,” McCoy said. “This is about the students; this is about learning; this is about the marketplace, and they’re being able to land in the best places.”

McCoy said student success with the Sample Gates Management fund is indicative of a growing interest in studying real estate at Kelley, in Bloomington and Indianapolis. This case, 380 students are majoring in real estate at Bloomington, including 115 students who have made it their sole major. At Indianapolis, 72 students are co-majoring in real estate, including 31 in a new Commercial Real Estate Workshop. In December, the Indiana Commission for Higher Education approved a 15-credit hour undergraduate certificate program in real estate at IUPUI beginning in fall 2023.

The Real Estate Club at Bloomington has seen a surge of student interest and doubled this fall, from 250 members to nearly 500. From there, students can apply to be part of the Commercial Real Estate Workshop and then work on the fund.

“I wanted to be able to generate wealth but also make an impact in the communities where we invest,” said Maliq Carr of Indianapolis, co-president of the real estate club and a senior majoring in finance. “When you’re building a new apartment complex, a new retail center, a new mall or industrial building, you’re creating jobs and you’re genuinely making the area a better place. If you invest in real estate appropriately, you can bring a net positive to a lot of people’s lives. That’s what attracted me to real estate.”