Eric Frank '07 (MSRE)
MSRE Alums' Firm Acquires Midwest Student Housing Portfolio
San Diego-based real estate firm Cardinal Group Investments, LLC (CGI), where Master of Science in Real Estate '07 (MSRE) alumni Jason Luker and Eric Frank are both principals, recently announced its acquisition and redevelopment plans of a 78-bedroom student housing portfolio adjacent to the University of Wisconsin campus in Madison, Wis.
The properties consist of seven buildings total including six stand-alone buildings and a historic 25-bedroom former fraternity house all located in downtown Madison. CGI purchased the portfolio for $4.5 million from a local Madison landlord, and the project was privately financed with $2.9 million in borrowing provided by DMB Community Bank of DeForest, Wis.
Luker started CGI in 2004 with three other partners. He met Frank while attending the MSRE program and by the time the two had graduated from the program, they decided they should be in business together and expand the company. The two both agree that the program was an invaluable experience for them and gave them a more holistic understanding of real estate and the skill sets needed to get their company to take off in the past six months.
"When I started the program," said Luker, "I had a narrow set of experiences and skills with some critical gaps in my education. The program helped me tie everything together and get a comprehensive understanding of all the elements necessary to be a real estate entrepreneur."
The company's business strategy is to focus on a few cities that have large education and government employment bases, which can ride out economic volatility. The acquisition represents CGI's first entry into the Madison market, although the firm is already an active buyer of student housing properties in various markets. CGI also owns housing in Oxford, Ohio, on the Miami University campus, in Denver, Colo. and in California. The firm is currently preparing to raise capital for its pilot student housing fund, which seeks out investment opportunities at flagship universities in the Midwest.
"Midwest student housing provides strong, stable cash flows that hold up in down markets," said Frank. "It's a very specific niche, but we have spent a lot of time understanding it, and we really believe in our strategy."
Frank and Luker are also both very optimistic about their business plan despite the fact that they are entering the market in one of the most challenging times most in the business have experienced.
"As much as our current economic environment presents major challenges, it also creates a great deal of opportunity for young entrepreneurs," said Frank. "We feel like our entry point into the market is very good because while others are unwinding messy deals from their last cycle, we are still putting all of our energy towards fresh opportunities, of which we are seeing a lot of right now."
Added Luker: "Times like these are when the Burnham-Moores Center becomes a critical intellectual anchor in the community. It's a place where people can incubate ideas, benefit from cutting-edge research and debate policy solutions that will help us build a stronger industry out of this wreckage."