Course Syllabus
PLA 6335 3.0 CREDITS
SYLLABUS
SCHEDULE OF REMAINING CLASS SESSIONS
March 31
Class 10: Guest Lecture by Trask Leonard, President/CEO Bayside Realty Partners
Review of Memo 2 & Deal Book Checklist
April 7
Class 11: Guest Lectures:
Rob Deckey, CIO north USA, Invesco.
Michael Davidson, global head of Corporate Real Estate at JPMorgan
April 14
Class 12: Guest Lectures:
Marc Holliday, CEO SLGreen
(12.30 pm) Justin Ehrlich (Founding Partner, Churchill Real Estate
SUBMISSION OF CAPSTONE DEAL BOOKS (E-copy of Deal Books & LIVE excel model) April 19 11.59pm
April 20 & 21
Class 13: Presentations of Capstone Projects
April 24 2- 3.30pm: Presentations of Capstone Projects for those with religious observance on April 20 & 21
April 28 5- 8PM
Class 14: SHARK TOWER
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Schedule:
Thursday 9 am - noon
Instructors:
Professor Patrice Derrington
411 Avery
pad2160@columbia.edu
Professor Brian Loughlin
THERE IS NO TA FOR THIS COURSE
- Course Description
The capstone course synthesizes the learnt analytical, comparative and critical processes involved in real estate development projects, transactions and investments. It provides an opportunity for the student to demonstrate their understanding of the dynamics of real estate development, its capital requirements, and delivery procedures.
With the utilization of various real estate development and investment case studies and the input by external industry professionals, this course presents a variety of property types, urban and economic contexts, critical decision-making and business styles. With the examination of each case, students are required to advance their analytical and decision-making skills to respond to the rapid resolution of real estate issues and challenges. With reference to actual development sites and real-time analysis, students will proceed through the assessment of the physical aspects, financial returns, and transaction processes of a deal and propose solutions or alternatives to a given outcome given the current day conditions.
In anticipation of the student’s imminent professional practice, the format for addressing the case studies has three stages – each representing a typical dynamic of the work environment - progressing from full class discussion, through group explorations, to the individual proposal and presentation:
- All-class discussion and debate of each of the selected case studies resulting in the identification of major development issues, capital structuring challenges, or decisions for which there might be alternatives given today’s context. From this discussion, each student will choose ONE of the cases (sites) to focus on for their Capstone Project.
- Study Group (self-selected), detailed exploration of the chosen cases as general preparation for the INDIVIDUAL production of the Capstone submissions.
- Individual exploration for a new or alternative resolution of the case study examined in Stage 2, taking into account the negotiation dynamics of that phase, and producing a comprehensive, detailed, and compelling proposal for a new or alternative outcome given current day conditions. Creative but credible efforts are encouraged, with the primary deliverable being a “Deal Book” (e-version, with optional hard copy) for potential equity partners.
Course Requirements and Assignments
Students will be expected to attend all classes which will comprise lectures, classroom discussions and presentations. Participation in all class discussions, are required as these will factor into the final grade.
Specific case studies will be discussed during the first few classes of the semester:
- Each of the cases will be examined in class. Students will prepare for the discussion and constructive participation will be noted towards the final course grade.
- Note that some of the offered case studies will also be addressed in various electives, with specified work on the chosen project acceptable for submission requirements of that course.
- Additional attention on the planning and site resolution of all the Capstone projects will be provided in PL 6871 Understanding Urbanism and Planning Sites (Lubinsky Session A).
- For their selected project, in teams of 3 – 6 people, each student will examine in detail with a view to critically evaluating the investment, its returns and risks.
- For the chosen project each student is to propose a new or alternative outcome for the case study taken under evaluation, and make the proposal in the form of a Deal Book.
Potential Capstone Projects Offered (subject to change):
- Public School 64 LES project (with Joint MARCH/MSRED studio)
- Methodist Church Site (with PL 6884 Faith-based Development (Delaine Session B)
- NYC Resi Portfolio Repositioning (with PL 6748 Entrepreneurship in Buying Real Estate Assets) Masood Bhatti
- RKO Keith’s Theater, Flushing, Queens (with PL 6882 Advanced Building Adaptation & Reuse (Golubitsky & Randall Session A)
- MSRED Manhattanville Site West 125 Street
- 975 Nostrand Avenue, Crown Heights, Brooklyn (Hudson Companies project)
- Bronx Community Land Trust Kingsbridge Armory Project (with PL 6753 Affordable Housing in the US: Policy & Practice) Paul Weech (Session B)
- Affordable Housing RFP project (BD) with Ernst Valery (with PL 6753 Affordable Housing in the US: Policy & Practice) Paul Weech (Session B)
Also, PL 6871 Understanding Urbanism & Planning Sites will cover the planning & site resolutions of all capstone projects
This Capstone Project is the key deliverable for the student’s presentation of their comprehensive understanding of the material studied in the MSRED program, and provides a tangible demonstration of professional capability and excellence.
Case Study and Capstone Project Content:
Discussions of the specific cases and the proposed Capstone Project should include the following:
- Development concept. Design, and functional program
- Zoning and entitlement approvals, hurdles, and/or strategies
- Market Analysis and input data for financial analysis
- Financial analysis and capital structure
- Project delivery schedule and asset management strategy
- Marketing and/or exit strategy
Capstone Project Details:
Individually students will be required to:
- Make a comprehensive, detailed, and compelling proposal for a real estate equity investment.
- The proposal is to be an alternative proposition for one of the case studies reviewed in the class. Each student is to create their own proposal and that proposal may be for an alternative in the property development, the investment structure, and/or the capital stack. Creative but credible solutions are encouraged.
- This proposal will be prepared in three steps and submitted as scheduled:
- Proposal Memo 1 (20% of course grade): Give a general description of the alternative proposal. Provide an evaluation of the detailed aspects of the given case study that are to be further resolved in the new proposal. Present all new data and assessments necessary to support the new proposal, such as market analysis, site reviews, functional evaluations, capital markets conditions, and investor sentiment.
- Proposal Memo 2 (20%): Provide the comprehensive financial analysis of the investment proposition. The full DCF Proforma for the holding period is to be provided in detail including the specifics of the development budget, construction funding, details of the capital stack, and returns to all investment participants. A summary in prose, with simple charts as necessary, is to provided that is specifically directed to the equity investor – this is the financial core of the “pitch”.
- FINAL SUBMISSION: DEAL BOOK: Complete presentation of the alternative Real Estate Investment Proposal comprising:
Written submission (50%) that comprehensively makes the case for the investment, i.e. includes a summary which “sells” the proposal, and consolidated supporting material.
Oral “pitch” of proposal (10%) of 8-10 mins in scheduled reviews at semester end.
The three components: Proposal Memo 1, and 2, and the Final Submission DEAL BOOK must be posted to Canvas on schedule.
Capstone Submission Components:
- Electronic copies of all materials to be submitted to Canvas prior to presentation including:
- PDF of Deal Book
- Active Excel file of proforma (formatted in a way that is easy to read and understand)
- PDF of Presentation Files
- Hard Copies of the Deal Book may be made at the election of the student.
Canvas:
Columbia University’s online Canvas system will be used for posting the course syllabus, selected class materials/handouts, hyperlinks to locations from where case studies and additional reading materials to be used in the course could be found and/or purchased by students. Canvas will also be utilized for the posting by students of all Case Study and Capstone submissions. Canvas will also be utilized as a tool for the instructor and Teaching Assistants to post announcements, and also for the instructor and students to connect outside of the classroom more consistently and conveniently.
COURSE GRADING CRITERIA
Course grading criteria are as follows:
- Capstone Project (in three submissions and presentation): 100%
- Memo 1 20%
- Memo 2 20%
- Written Deal Book 50%
- Presentation 10%
Only exceptional performers in all of the grading criteria will receive a High Pass.
READINGS
Students will be expected to do the assigned READINGS and PREPARE THE CASE STUDIES in advance of class.
The case studies for class discussion will be posted one week in advance on Canvas.
The Textbook referenced for the class is: Professional Real Estate Development, Richard Peiser & David Hamilton. ULI publications.
Additional references for the course will be provided on Canvas.
Other Notes
DO NOT CONTACT THE CASE STUDY SPONSORS UNDER ANY CIRCUMSTANCES, UNLESS THEY SPECIFICALLY REQUEST IT AND THE INSTRUCTOR IS INVOLVED.
COURSE OUTLINE
Jan 20 Class 01: Course Introduction, the Capstone Project: Course outline with grading details. Details of the Capstone Project. Analytical Framework for case study activities.
Discussion of 4 Project Offerings & Project Offerings
- Public School 64 (P.Derrington) , Methodist church site (Jerrod Delaine), Portfolio Restructuring (Lavy Rosenthal/Masood Bhatti), Former RKO Theater (Howard Goldman/Golubitsky/Randall)
Reading: Peiser & Hamilton Ch1
Jan 27 Class 02: Discussion of 4 Project Offerings
- Presentations by MSRED Manhattanville (Derrington), 975 Nostrand Ave, Crown Heights (Hudson), Bronx Kingsbridge Amory (Loughlin), Affordable Housing (Ernst Valery/ Loughlin)
Reading: Peiser & Hamilton Ch 7 (pgs 326-356).
Feb 3
Class 03: 10 am Project Planning and site layout Review – Brian Loughlin
9am Market Analysis Review – Patrice Derrington
11 am Portfolio review/Rosenthal - Wood
11am Bronx, Affordable, MSRED M/Loughlin – 412
11am Faith based/Delaine – Fay lounge
Reading: Peiser & Hamilton Ch 7 (pgs 326-356).
Feb 10
Class 04: 9 – 10.15 Guest Lecture: Elisa Ours/Corcoran Sunshine
Patrice Derrington: Memo 1 Checklist reminder
10.30 – noon Hudson/Barrett – Wood
10.30- noon RKO theatre/Goldman – 412
10.30 -noon PS64/Derrington -Fay lounge
Submission: Capstone Project Proposal Memo 1: Feb 16, 11.59pm
Feb 17
Class 05: Guest Lecture by Nick Bienstock, Savanna case study
Review of Financial Analysis – Patrice Derrington
Feb 24
Class 06:
Lecture: Guest lecture by Ralph Rosenberg, Head of KKR Real Estate
Review of Memo 1s – Patrice Derrington & Brian Loughlin
Reading: Peiser & Hamilton Ch 7 (pgs 326-356).
March 3
Class 07: Guest Lecture by Ethan Lebowitz, Bridge & Mezz loans at Granite Point Mortgage Trust
Lecture: Review of Debt & Equity Structuring _ Patrice Derrington & Chris Munsell
Memo 2 Checklist
Reading: Peiser & Hamilton Ch 7 (pgs 326-356).
March 10
Class 08: Lecture: TBD Planning person…
Submission: Capstone Project Proposal Memo 2: March 23, 11.59pm
March 24
Class 09: Guest Lecture: The Architect Developer: Jared della Valle, Alloy
Review of Deal Books – Patrice Derrington and Brian Loughlin
March 31
Class 10: Guest Lecture by Trask Leonard, President/CEO Bayside Realty Partners
Review of Memo 2 & Deal Book Checklist
April 7
Class 11: Guest Lectures:
Rob Deckey, CIO north USA, Invesco.
Michael Davidson, global head of Corporate Real Estate at JPMorgan
April 14
Class 12: Guest Lectures:
Marc Holliday, CEO SLGreen
(12.30 pm) Justin Ehrlich (Founding Partner, Churchill Real Estate
SUBMISSION OF CAPSTONE DEAL BOOKS (E-copy of Deal Books & LIVE excel model) April 19 11.59pm
April 20 & 21
Class 13: Presentations of Capstone Projects
April 24 2- 3.30pm: Presentations of Capstone Projects for those with religious observance on April 20&21
April 28 5- 8PM
Class 14: SHARK TOWER
DEAL BOOK SUBMISSION
Submit: pdf of Deal Book AND LIVE excel model.
Content should include:
▪ Executive Summary – 1 Page Maximum
- Development Concept, Design and Functional Program
- This should be the physical foundation for everything that follows
- Explain the vision for the project
- Establish the connections of the project to the neighborhood
- Include a functional program, and the building layout, including square footages for each proposed use
o Architectural Synopsis
- Site plan and location in neighborhood context
- Ground floor plan and at least one typical upper floor plan
- Elevations and/or renderings are encouraged (these can be included in the appendices)
- The square footage and how it works on site should clearly be laid out, including the linkages between the development and its surroundings, the relationships between various aspects of the development, and a general visual takeoff on the initial concept
- Most important is that the design should support the feasibility of the vision
▪ Zoning and entitlement approvals, hurdles, and/or strategies
- Zoning analysis
- Massing diagram (bulk study)
- Description of how the massing configuration responds to zoning limitations
- Identification of remaining entitlement issues or applications for variances (with justification)
▪ Market Analysis and input data for financial analysis
- Summarize the relevant market analysis
- Derive the implications for the project and support for the concept
- Provide additional detailed materials as necessary in the appendix
- Provide the market data that informs and substantiates the assumptions made for pricing, revenues, absorption, and expenses for the financial analysis of the project
- DO NOT REGURGITATE FACTS ABOUT THE MARKET, SUCH AS CENSUS DATA AND DEMOGRAPHICS
▪ Financial Analysis and Capital Structure
- Acquisition price for land or existing property that your concept can support
- Estimate of Construction Costs
- Total Cost of development (or redevelopment)
- Financial feasibility of the development proposal
- Capital Structure: debt and equity strategies
- Sources and Uses of Funds
- Exit Strategies (Options) including timing, pricing, potential purchasers/funders
- Net profit and Return on Cost of Development Activity
- ATCF and IRR (both unlevered and levered) for appropriate Holding Period
- Cash on Cash returns, Equity Multiple
- Sensitivity Analysis
- A clear “ask” of $X of debt and $Y of
▪ Project delivery schedule and management strategy
- A project schedule or Gantt chart
- Project management procedure for ensuring timely and within budget
▪ Marketing and/or exit strategy
- Marketing Plan that includes appropriate strategy for sales or lease-up.
- Marketing Budget
- In addition to the planned exit strategy provide a fall-back analysis (Plan B) in case the concept or a portion of it
▪ Project Risks and Mitigation
- Identify the most probable risks
- Provide credible and sufficiently detailed strategies to mitigate those
- Summarize risk scenarios
▪ Appendices:
- Market Analysis support materials (relevant and succinct)
- Additional renderings or plans
- Details of Financial Analysis in a Live Excel Spreadsheet file
Course Summary:
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