World

Student Housing Pioneer Faces Angry Investors, Irate Judges and a $115 Million Bill

Patrick S. Nelson is a man under siege.

An early player in the off-campus student housing business, Mr. Nelson built his property management company by raising money from big lenders and hundreds of wealthy individuals. But his business has soured in recent years, and Mr. Nelson — who has so far reneged on promises to pay back some of those partners — now faces more than a dozen lawsuits and a dogfight with a private equity firm.

Mr. Nelson is on the hook for at least $115 million, which he has not paid despite escalating fines and interest and twice being held in civil contempt by judges over the alleged misuse of company money. His defiance has frustrated investors and lenders, and irritated some of the judges hearing those disputes.

“I am seeing a lot of money moving around, and I don’t like it,” Justice Melissa Crane said in February at New York County Supreme Court during a hearing involving Fortress Investment Group, a private equity firm that is trying to foreclose on one of Mr. Nelson’s properties. In January, Justice Crane held Mr. Nelson in contempt of court after finding that he had violated court restrictions by using nearly $3 million from his business to pay for personal expenses, including mortgages on an upscale vacation rental ranch in Utah and a home in California, golfing trips and credit card bills.

Mr. Nelson’s multimillion dollar ranch in Daniel, Utah, in February.Credit…Kim Raff for The New York Times

“There were bills we had to pay,” Mr. Nelson testified at a follow-up hearing on March 12. Mr. Nelson declined to be interviewed but said in written comments to The New York Times that he “is doing everything he can to live up to his obligations.” He said the civil contempt findings were unwarranted.

Mr. Nelson, 51, started Nelson Partners Student Housing in 2018 after parting ways with his brother, with whom he ran a student housing business for nearly two decades. The siblings were among the first to spot an opportunity that has become a $10 billion-a-year market. In 2017, Inc. magazine put their former firm on its annual list of the fastest growing private companies. Big players like Blackstone have entered the market in recent years, lured by the promise of rent payments that are virtually guaranteed because of student loan money.

Back to top button