University of Utah Seeking Director of Investments

The University of Utah is seeking a director of investments, according to a job posting listed on Tuesday.

In 2022, the university transferred its investment organization to a nonprofit called University of Utah Growth Capital Partners following the retirement of CIO Jonathan Shear, a spokesperson for the university says.

The Salt Lake City-based university is also currently selecting an outsourced CIO firm to manage the $1.47 billion endowment’s assets and is working on an agreement with Growth Capital Partners to determine the specifics of the arrangement between the endowment and GCP in the interim, according to the spokesperson.

The director of investments will oversee the management and performance of the endowment and will act as a liaison between GCP and the OCIO firm. Korn Ferry is listed as the recruitment consultant for the position. The individual in the report will report to Robert Muir, associate VP of debt and asset management at the University.

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“[The role] is more liaison and administration than investing, but you’d be able to focus on underwriting each of the OCIO actions, and that would be a great experience if you’re only five years into the business,” said Peter Madsen, director and CIO of the Utah School and Institutional Trust Fund Office, in a LinkedIn post.

Requirements for the position include from five through seven years of investment management experience and prior experience working with endowments, foundations or in an institutional investing setting. The listing includes a preference for candidates with master’s degrees and professional certifications like a CPA or a CFA.

As of fiscal year-end 2023, the fund returned 5.9% for the year, outperforming its target benchmark of 5.5%. The fund has returned 8.39%, 5.95% and 6.02% over the past three, five and 10 years, annualized. The fund allocates 28% of its portfolio to equities, 20% to fixed income, 17% to diversifying strategies, 13% to private equity, and 9% each to private real assets and cash.

Alternative real assets—as in, beyond standard legacy options like offices and shopping malls—are a rising investment area. Three sectors stand out, according to Christopher Merrill, owner, chairman and CEO of Harrison Street Real Estate Capital LLC, in an interview. Two are related to demographics: student housing and senior housing, and the third to technology: data centers.

A degree of macroeconomic optimism propels these investment choices, but the good thing about them is that they all are not cyclical. “The resilient investment outlook for alternative real assets remains robust across various economic scenarios,” said Merrill, whose investment management firm has focused on alternative real assets since its founding in 2005, with $55 billion in assets now under management.

Data centers. The need for storage is multiplying fast. Advanced technology, especially artificial intelligence, is driving a boom in data centers, which will be at the crux of the digitization of everything, from overseeing electricity delivery to running factories to managing air traffic. So the industry should expect investments in data infrastructure to mushroom by 60% annually in coming years from $2 trillion now, per a report from asset manager BlackRock.

Alongside the data center growth will be a surging need for energy, and Wall Street expects a lot of it to be derived from renewables. “We are seeing the AI buildout boost demand for renewable energy,” wrote David Giordano, global head of climate infrastructure at BlackRock. Commercial property broker CBRE, which sells data centers (and just acquired Direct Line Global, which builds them), estimated that the centers will expend more than 3,000 megawatts of power this year, up 50% from two years ago.

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Data output has been growing at a 32% annual rate over the past 10 years. This all means data centers should produce an ever-larger revenue stream. Prices to rent data center capacity over the past decade have risen by one-third, CBRE reported.

As such, CBRE predicted, new data center development likely will attract more institutional investment in 2024, as investors are under-allocated to digital infrastructure by 1.5% to 3%, compared with other asset classes. Allocators are moving into limited partnerships, with seven- to 10-year terms, devoted to data center production, Merrill said.

Some institutions have “been on the sidelines” for these three types of alt real estate, he said, and dropping interest rates should bring them into these investments.

Student housing. Undergraduate enrollment, after a decade-long slide, is expected to swell by 9%, to 16.8 million by 2031, the National Center for Educational Statistics estimated. The demand for more dorms and the like is coming from large public universities, both in the U.S. and abroad, not smaller schools, Merrill said.

Leasing of rooms has been climbing, up 2.4% this past school year from 2022-23, and rents jumped 6%, according to research firm Yardi Systems. Merrill’s firm has partnerships that own dorms and campus power plants. He avoids small private colleges, he said, “because a lot of them have folded.”

Senior housing. Merrill pointed to what he called “a silver tsunami” as the U.S. ages. Capitalization rates for senior housing averaged 5.0% in 2021, a figure that has increased by about 2 percentage points since then, per a study from Jones Lang LaSalle, the real estate investment manager. By the mid-2030s, he said, the nation’s 80-plus population will have almost quadrupled, to 21 million.

Senior housing, along with health care facilities, have seen slower construction in recent years, which means a lot of catch-up will occur, Merrill argued, thus “creating a supply tailwind for coming years.”

University of Utah Seeking Director of Investments

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Data Centers, Student and Senior Housing Will Be Hot Areas, Says Investment Chief