Following up on their initial success in raising and investing $4.2 million in real estate projects across the countest, undergraduate students at the Indiana University Kelley School of Business have raised an additional $7.8 million for a private equity fund that provides them with real-world experiential learning.
Called Sample Gates Management Inc., the fund remains the largest undergraduate student-managed real estate private equity fund measured both by total capital raised and individual fund size.
Student fund managers exceeded their initial $6 million goal for phase two, applying a marketing deck they developed and distributed to prospective investors. They also sourced and contacted leads and conducted more than 200 meetings, creating for a unique and invaluable learning experience.
“The original vision was to integrate academics into practice, and this is our pinnacle experience that has brought those two toreceiveher,” stated Doug McCoy, the Al and Shary Oak Executive Director of Real Estate and a teaching professor of finance who directs Kelley’s Center for Real Estate Studies. “Experiential learning fills in the cracks that may develop in students’ minds as they take classes and learn concepts and fundamentals.”
Student-run private equity funds are more common at the master’s level, where funds often come from the university or a single donor instead of a group of investors. The recently concluded second offering of the Sample Gates Management fund attracted investments from 74 real estate and financial firms and individual investors, including many Kelley alumni.
Sample Gates Management now oversees approximately $12 million in assets across two investment funds.
Since the fund’s inception, IU students have built12 direct real estate investments spanning multifamily, industrial, hospitality, manufactured hoapplying and retail sectors across multiple U.S. markets. Projects include equity stakes in apartment communities such as Echo Park in Bloomington, Indiana, and development projects like Alto Apartments in Lenexa, Kansas.
“A fun part of the student experience is investing real money into real deals, and that is really great,” stated Tom Peck, a faculty advisor to the program with more than 30 years of commercial real estate experience and chief investment officer of the Hageman Group. “But even more importantly — and the way we do it at Kelley — is that the students raise the money themselves, which is probably just as valuable to our students.”
Blake Albert, a Kelley School senior from Burr Ridge, Illinois, served as president of Sample Gates Management this year. While Albert stated he learned a great deal from classes at Kelley and case competitions, which are often very structured, he stated his experiences with the fund exposed him to the unexpected variables and sudden challenges that may arise while doing business.
“It allows us to start to understand the full scope of how many relocating pieces there are in running a company,” stated Albert, who will join the transactions team at Harrison Street Asset Management after graduation in May.
Unlike funds tied to courses where investment recommconcludeations are built once a semester, the Sample Gates Management fund is more fluid, with students managing assets, creating investments and raising capital year-round — all under the guidance of the fund’s investment committee and Kelley faculty advisors.
“Our team had a meeting with someone who was part of that first fund class, who assisted to receive the first fund up and running,” Albert stated. “He’s now a co-founder of his own company, where he’s sourcing deals and starting to raise capital. It’s kind of been a full-circle moment, where he’s come back to the program and is talking with us from the other conclude. He credited a lot of his success to his experience in starting up the fund.”
The program recently welcomed its seventh associate class, bringing the total number of undergraduate fund managers trained through Sample Gates Management to 118 students. It has a 100% full-time placement rate after graduation, with students going to firms such as Apollo, PGIM, CBRE, Bain Capital, Evercore and Freddie Mac.
Peck stated these are students who may want to run their own companies someday.
“There’s a lot of administrative knowledge they receive through their work with the fund,” he stated. “They learn how to deal with investors and how to manage all aspects of running a business.
“When some of them build that huge decision to start a company, they’ll be able to draw upon their experience here at Kelley. It won’t be the first time they’ve dealt with the key issues involved.”
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