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Bouncing high well after being beaten down really battling a financial crisis some real estate investment trust.
This article back to school -- tender properties is it's one of several rates now investing.
US charter schools and joining me now is the company CEO David brain -- welcome to to the show.
-- charter schools.
Thanks Charles well watch our schools because there it's a growing area of investment it's very stable area of investment.
And it's a specialized area investment and we like those where it takes specialized knowledge and dedication that's kind of the DNA of the company so -- has all the ingredients we really like stability.
Returns growth and really -- a little competition.
Profile that's what I'm trying to send OK charter schools and nonprofit they don't they don't bring -- -- to the bottom line how they how do you make money through investing through them.
-- -- -- Well well every year charter schools just like any public school these are public schools are state supported -- based on enrollment.
They receive funding from the state based on their enrollment numbers.
They portion that money to pay for -- in teach there in classroom teaching expense which is about two thirds of their cost.
Which is higher than the average public school of mind you and then about a third of those monies -- those gets split between occupancy and administrative costs.
And so were that occupancy costs we build them up purpose built specialized highly efficient.
Brand new school.
Better than the average school out there and state of the yard and they pay us then rent.
Based and all of that despise economically and so forth based on the anticipated enrollment.
And things were very well because the state now gets a very effective education process.
Very cost effective of spending in classroom and the parents the families are very happy.
Because they have a nice facility and they have an effective education process for their children as well not been involved in charter schools I'm a big fan but the world cannot extrapolate from what you're saying that you feel like states themselves.
May be at that bottom to the point where they're not gonna have to cut back on educational budgets.
I think there are some states is still maybe have some cuts ago California's probably the poster child the California look at what they're cutting their cutting double digits mid teen double digits.
But they're cutting very high proportion all their cuts are at the higher education level not all the cutting elementary Ed.
Spending by about 2% Missouri.
We're we're we're headquartered just came out with their state spending plan and they -- double digit cuts at higher education.
And actually single digit increases in elementary Ed so you have to Parse what -- the spending cuts at the state level between higher at an elementary Ed.
It's coming down to the fact that most state legislatures are feeling like.
Higher Ed is that it is not a right it's a privilege and you can pay for that privilege yet elementary Ed is an entitlement is a right.
And that is a core state responsibility and that's going to be supported as we supported traditional levels without extreme cuts.
David you know almost.
Without fell for the last three years we've had experts who come on -- said.
This is the year the other shoe drops commercial real -- gonna -- it's gonna implode.
Not hearing that as much as we used to do you think that they had the REIT space has survived at all and in generally is ready to poised to take off.
I think it has really -- I think the very good news Charles is we've had time.
The commercial real estate issues have been it has been the -- has been kicked down the road for a couple years.
But really what -- you just heard some of the reports the banks are earning now the bank's balance sheets are in better shape and they're really the sellers these guys are problems.
The buyers or large portion the buyers the real world is very high and high very high equity and low debt position.
Very high coverage ratios -- and a great position to be a buyer what we're gonna have and 2012.
Is all the five your mind it was originated in 07 at the height of the CMBS market.
That that -- your money which was a huge portion I was so fifty billion dollars in deals are so those are all gonna come due when we're gonna have to face that the great news is.
Both the sellers and the buyers are in better positions for an orderly market.
It's not going to be a crisis there are going to be a large number transactions.
And he's going to be good opportunity for people to make Smart buys but it's not going I don't think it's gonna be a disaster but I think you will see a lot of transactions.
Supporting the industry and be very interest -- Well we thank you even though I know it's -- financial investment.
Thanks a lot for investing in charter schools favorable -- Entertainment Properties we appreciate it feel --
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