Abstract: This study discovers that landlords and real estate lenders who are wary of dealing with charter schools perceive the schools as much riskier clients than they actually are. It found that fewer than six percent of the schools have closed in a way that impacted their landlords or real-estate financiers. Certain factors were found to reduce overall risk. Charter schools started in conjunction with EMOs were found to have negligible failure rates, even if the contract with the EMO is later terminated. Charter schools with more students are less risky than average, as are those started one year or more after the home state passes a charter law. The study found that the charter school facility issue is to some extent circular: securing a long-term lease or mortgage helps a charter school to stabilize, attract students and survive -- but many cannot strike such a deal because of concerns that they won't survive.
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