In early 2012, Lee Neibart, head of global investments for AREA Property Partners, considered the imminent changes to the real estate investment fund business. Since the early 1990s, the real estate private equity industry had experienced explosive growth—yet for many investors, their allocations to real estate had proven to be riskier than anticipated.
The challenges Neibart faced in weighing new investment models for AREA are the focus of a new Columbia CaseWorks case by Rona Smith ’99 and Lynne B. Sagalyn. Published in May, "Debating Strategic Directions in a Changing Investment Landscape: AREA Property Partners" adds to the deep array of proprietary real estate business cases taught in Columbia MBA Real Estate Program classes. The case was first taught in the spring 2012 Advanced Seminar in Real Estate, and the student slide deck from that class accompanies the teaching note.
In working through the case, students must consider various modifications to the firm’s business model as affected by the macroeconomic and microeconomic drivers of the real estate market. Key questions include whether AREA should focus its new fund primarily on multifamily rental housing, move to a more vertical orientation, or move away from the commingled fund model. In addition, there are managerial issues such as how to solidify the firm's leadership in the face of increasing competition, make an evaluation with minimal "hard" materials, and be resourceful in finding outside materials to help frame the issues.
Columbia CaseWorks develops teaching cases and materials for use in Columbia Business School classrooms. All material is closely tied to and based on the research and expertise of Columbia’s world-class faculty. Columbia CaseWorks Cases are available to both Columbia Business School and outside faculty.