Student Housing Developer Patrick Nelson on Hook for $115M

The bills are adding up for student housing developer Patrick Nelson as he continues to battle lawsuits on multiple fronts.

The leader of Nelson Partners Student Housing owes $115 million in judgments, penalties and interest, the New York Times reported. That debt may grow as investors eviscerate the landlord for failing to take responsibility for his firm’s struggles.

Nelson is facing more than a dozen lawsuits against his 18-property portfolio. One of his biggest battles is with private equity firm Fortress Investment Group, which is looking to foreclose on Auraria Student Lofts in downtown Denver, foiled by Nelson’s move to put the property into bankruptcy.

Nelson owes $57 million to Fortress — which secured a judgment in its favor last summer — and $50 million to other investors stemming from a settlement at Skyloft, a complex near the University of Texas in Austin. Additional claims for tens of millions of dollars are still pending.

Making matters worse, Nelson has been held in civil contempt by judges twice for allegedly misusing company money, once using almost $3 million on personal expenses, including a vacation rental and golfing trips. He also allegedly violated terms of the Skyloft settlement by misappropriating settlement money.

Nelson blames his firm’s struggles on the pandemic. He also blamed the Times for its coverage of his company, telling the publication in a written statement that its articles “crushed the ability to get loans.”

The property manager’s plan to get out from underneath his debt appears to be twofold: Nelson is looking for new financing to help pay off investors, and he aims to sell some properties for a profit, testifying last week in a contempt hearing that he was working to unload three complexes.

Nelson’s contempt proceedings are scheduled to resume on Monday.

— Holden Walter-Warner