This
is one of Valerie Strauss’s best columns, where she reviews a television
interview with Dennis Brain, the CEO of Entertainment
Properties Trust. Brain is a big investor in charter schools, and he is bullish
about the future.
Here
is a small snippet of the interview:
DB:
Well I think it’s a very stable business, very recession-resistant. It’s a very
high-demand product. There’s 400,000 kids on waiting lists for charter schools
… the industry’s growing about 12-14% a year. So it’s a high-growth, very
stable, recession-resistant business. It’s a public payer, the state is the
payer on this, uh, category, and uh, if you do business with states with solid
treasuries. then it’s a very solid business.
Anchor:
Well let me ask you about potential risks, here, to your charter school
portfolio, because I understand that three of your nine “Imagine” schools are
scheduled to actually lose their charters for the next school year. Does this
pose a risk to investors?
DB: Well, occasionally — we have Imagine arrangements on a master lease, so there’s no loss of rents to the company, although occasionally there are losses of charters in certain areas and they’re used to peculiar, ug, particular circumstances. In this case it’s a combination of relationship with the supervisory authorities and educational quality. Sometimes educational quality is very difficult to change in one, two, or three years. It’s a long-term proposition, so uh, there are some of these that occur, but we’ve structured our affairs so this is not going to impact our rent-roll and in fact we see this as uh maybe even a good experience as the industry thins out some of the less-performing schools and we move on to the best-performing schools.
Anchor:
David, there has been somewhat of a public backlash to charter schools in some
areas given their use of public money, as you noted. Any risk to the growth of
charter schools generally?
DB:
I don’t — there’s not a loss of risk, there’s probably risk to everything but
the fact is, this has bipartisan support. It’s part of the Republican platform
and Arne Duncan, secretary of education in the Obama administration, has been
very high on it throughout their work in public education. So we have both
political parties very solidly behind it, you have high demand, high growth, you
have good performance across the board. Most of the studies have charter
schools at even or better than district public education. So, I think it has
some risk because it’s new and it’s emerging and it is a high-growth category.
But at the same time I think … much more’s going forward so it’s still a safe
area for investment.
