Donjek Project: Designing a Structure for Purchase and Operation of Reused School Buildings

We are very pleased to announce that Donjek is involved in a
process to convert recently-closed school buildings in Minneapolis to active reuse, using a range of
equity and debt sources including equity investments, debt financing and tax
credits. Partnering with the Minneapolis School
, Urban Design Lab and the Local
Initiatives Support Corporation (LISC)
, Donjek will be in the coming months
evaluating the prospects for establishing a real estate investment trust (REIT)
to acquire and operate two large former elementary schools totaling over
200,000 square feet of leasable space. Such a REIT could be a very effective investment instrument with which
to involve a range of potential investors in a new real estate investment model.

The reuse of school buildings is an increasingly relevant
issue for many communities nationwide, both small and large in population.  Minnesota’s school
districts each face a particular circumstance – for example, enrollment trends
are strong in Pequot
in the lakes region, stable in the small town of Rushford,
and falling dramatically in the Lac Qui Parle valley. On the other hand, the small district in Houston,
has nearly tripled in enrollment as a result of its innovative
web-based curriculum, which has secured the presence of its physical school.

The data communicate the story effectively. As shown in the graph included here (click on it to enlarge the image), the overall
public school enrollment trends for Minnesota statewide and for Midwestern states together have been stable in the last
decade. Minneapolis Schools, however,
have seen significant declines in enrollment, due in part to students leaving
to attend neighboring school districts, charter schools and other alternatives. The policy discussion aside, the Minneapolis Public Schools
have twelve buildings they are seeking to sell
in one form or another.  Note also the dramatic red line, which indicates the enrollment drop among Minnesota’s fifty smallest school districts, which had an average total enrollment of 80 students during the 2007-8 school year.

We look forward to keeping you posted as the process
progresses and we engage in mapping out ways to secure active reuse of these
buildings. If you would like to learn
more as an investor, a prospective tenant or a neighbor, feel free to contact me by