“We use it as a way to support the university in an era where public support has really dried up,” Schlissel said, adding that Detroit neighborhoods could benefit from more outside investors.

“The challenges around housing in Detroit are enormously important,” he said. “The downtown and the Midtown seem to be doing great and the neighborhoods seem to be lagging.”

Hanker, Friedman and attorneys handling the evictions did not respond to numerous messages and attempts to solicit comment.

U-M regents meeting minutes do not explain why the university, which has a $11.9 billion endowment, invested in Detroit real estate or how the deal came together.

The investment in Fortus was one of three made from U-M’s long-term endowment portfolio in the winter 2018. The other two were in a venture capital fund and a commercial real estate venture in Washington D.C.

A memo to regents from U-M Chief Financial Officer Kevin P. Hegarty explained that “Fortus targets undervalued homes that are typically two to three bedrooms and require varying degrees of renovation. The properties are held for rental income, but Fortus expects to dispose of the assets in bulk through a large portfolio sale.”

Buy low, sell high

That’s a business model familiar to any viewer of HGTV or other real-estate investment shows: Buy low, renovate to increase the rent, and sell high.

While stressing he isn’t aware of the “specifics of the investment,” Schlissel said an argument could be made “that the dislocation of a certain number of people in return for investment in decaying housing stock is part of the pathway to making the city a better place to live.”

“I worry about the University of Michigan investing in this fund because the most likely outcomes of the fund’s purchases in Detroit are counter to the U-M’s mission as a public university with a strong commitment to the city.” – Margaret Dewar, a U-M urban planning professor emerita who studies Detroit neighborhoods

Margaret Dewar, a U-M urban planning professor emerita who has studied tax foreclosure and development in Detroit, said she is concerned about Fortus’ impact on neighborhoods.

Once one of the nation’s leaders in black homeownership, Detroit now is a majority-renter city. Last year, bank lenders wrote only 1,000 mortgages in a city of 673,000 residents, and affordable housing is becoming scarce.

“I worry about the University of Michigan investing in this fund because the most likely outcomes of the fund’s purchases in Detroit are counter to the U-M’s mission as a public university with a strong commitment to the city,” Dewar said.

“President Schlissel’s initiatives and the efforts of hundreds of faculty and thousands of students working in partnership with Detroiters need to succeed, not be undermined by this real estate investment.”