Real Estate Private Equity [M1]
Real Estate Private Equity explores, in depth, the analysis, decision-making and challenges private equity investors face when:
1. making and structuring highly leveraged investments,
2. managing investments through turbulence if market difficulties emerge,
3. developing superior, differentiated portfolio strategies and successfully aligning these with institutional capital,
4. procuring and managing sources of equity and debt capital,
5. negotiating institutional investor capital agreements, local partner operating agreements and transaction execution agreements,
6. managing all the stakeholders involved in complicated real estate transactions when circumstances require change,
7. successfully building and managing their organizations for long-term sustainability in the midst of having to compete in an environment fraught with constant risk, uncertainty and geo-political and economic fluctuation.
The course will be structured in a format using actual business cases, where each case will tackle a situation and specific set of challenges faced by private equity investment groups. Cases will typically be 20 to 30 pages in length including a number of subsidiary agreements and schedules. Students will need to lay out the problems being addressed, probe the situation, develop the right questions to focus on, analyze the relevant data, and evaluate the best courses of action along with their anticipated outcomes. Case situations will be viewed from multiple perspectives: the private equity investor, their institutional capital sources, local operating partners, lending institutions, tenants, and many times public authorities and their representatives.
There are two modules that comprise the course. Each module will last ½ of the semester. Students have the option of taking just module 1 for two credits, or both modules 1 and 2 for 4 credits.
In module 1 we will be covering 5 business cases. The subjects of investigation and discussion will include
1. analyzing an international development/redevelopment joint venture opportunity,
2. examining the process of investing in debt securities in a complex transaction,
3. assessing a hostile tender offer of a public company and examining the responsibilities to all of the stakeholders in making the right decisions,
4. from an investment committee member’s perspective examining, evaluating and choosing between two disparate competing investment opportunities, a joint venture acquisition of a student housing project against a mezzanine debt investment in an international real estate operating service company,
5. Deriving what the optimum path forward should be in the launch and capitalization a new startup real estate development company.
In module 2, students will be tackling an independent study research paper which delves deeper into a topic of choosing in real estate private equity. Some potential areas to pursue include:
1. Developing a business plan to start a new real estate PE firm,
2. Evaluating the strategy and long term competitive viability of an existing real estate PE firm,
3. Analyzing a live, complicated real estate PE transaction,
4. Investigating and conducting a comprehensive research report to evaluate a given market opportunity,
It is expected that papers delivered for module 2 will be approximately 20-25 pages in length, single spaced, plus exhibits, quantitative analyses, and appendices.
Course prerequisites: 5275 and 5276 or other course equivalents.
2021 Plimpton-Poorvu Design Prize, First Prize: Building a Scalable Business in Data Centers
Frank Apeseche and Holly Samuelson, Faculty Advisors