MBA Real Estate Program students Matthew Giammanco ’13, Jeffrey Organisciak ’13, and Andrew Stone ’13 won the top Alexander Bodini Foundation Prize at the Real Estate Project Class Final Presentations Competition and Awards Dinner at Columbia Business School on December 12. Theirs was one of four professional-quality presentations by student teams at the competition, which is the culmination of the second-year class taught by Adjunct Associate Professor Andrew C. Jacobs ’96.
Giammanco, Organisciak, and Stone, under the team name GOS Advisors, created the winning proposal for Austin Centre, a 322,000-square-foot office property built in 1986 in downtown Austin, Texas. Company sponsor Lehman Brothers Holdings, the estate of the former investment bank Lehman Brothers, was represented by past Bodini Prize winner Jane Yang ’10. Yang worked with the students on the project during the semester.
The team analyzed Lehman Brothers Holdings' position in Austin Centre: senior and junior mezzanine investments subordinate to a mortgage held by another borrower who, in danger of missing a significant tax payment, had proposed a restructuring. In keeping with the corporate mandate to produce returns for Lehman’s creditors, the team recommended foreclosure on the distressed property in order to maximize the recovery value for the mezzanine position. After the competition, Yang disclosed that Lehman had in fact decided upon this solution in the confidential case two years ago, and that they were now going to market with high expectations for the property.
Second place was awarded to the International Team—Diego Banos Garcia ’13, Diego Espinosa ’13, Michael Wise ’13, and Xiaoqi Wu ’13—for Metropolitan Real Estate Equity Management and the Opportunity Presented by Public Pension Funds. Following research that identified a sweet spot among small pension funds that could increase their real estate allocations, they recommended a pension investment strategy for this fund of funds.
Uchenna Akujuo EMBA ’13, Adam Cohen ’13, and Hilary Davidson ’13, the MicroDev Team, finished third with “The Nest,” a multiuse development proposal for a possible site acquisition by Tishman Hotel Realty in Chicago.
The fourth-place team was Richard Benson ’13, Adam DeBoey ’13, Zulekha Inayat ’13, Travis Stabler ’13, and Kraig Tuber ’13 for Silverpeak Realty Partners. Their analysis of investment options in the current U.S. residential market prompted a recommendation for strategic, unlevered investments in land.
Robert Berne ’62 formerly with Milstein Properties, Erik Horvat ’04 of the Port Authority of New York and New Jersey, and Nancy Lashine ’81 of Park Madison Partners served as judges, listening to the presentations and questioning the students on their analyses and conclusions. Other student teams had been eliminated from contention prior to the competition.
This marked the fourteenth edition of the competition, a signature offering of the Paul Milstein Center for Real Estate. Established in 1999 with a generous gift from the Seevak Family Foundation, the competition was conceived to encourage students working in groups to take the kernel of an idea and develop it into a comprehensive business plan. For the sixth consecutive year, the competition was intertwined with the Real Estate Project Class in which students work on group projects with industry sponsors. The competition and dinner were graciously supported by the Alexander Bodini Foundation and Daniele D. Bodini ’72.
At the event and the subsequent dinner and awards ceremony, both Professor Lynne B. Sagalyn, the Earle W. Kazis and Benjamin Schore Professor of Real Estate and Director of the Paul Milstein Center for Real Estate, and Professor Jacobs praised the students for their thoughtful efforts and presentations and thanked Bodini and the judges. Jacobs noted that the presentation quality improves with each class. Bodini closed by expressing deep appreciation for the faculty and students and noting what a fun and human business real estate can be.
First Place ($3,600)
|Matthew Giammanco, Jeffrey Organisciak, and Andrew Stone|
[View presentation video... ]
Lehman Brothers Holdings (Jane Yang ’10)
Lehman Brothers owns a $21.6mm senior mezz and $10.0mm junior mezz loan that are collateralized by an office property in the CBD of Austin, TX. These mezz notes are subordinate to a $28.4mm mortgage owned by a third-party lender. Taxes are due in January and property cash flows are not sufficient to cover that payment. As such, Borrower would need to come out of pocket to cover the expense. Given where property value falls relative to the last dollar of debt, the Borrower has approached Lehman with a restructuring proposal.
What is the best course of action to maximize recovery value to Lehman—restructure or foreclose? If restructure, does the borrower’s proposal provide compelling terms relative to Lehman’s broader real estate/corporate strategy? If foreclose, what is the recommended business plan for the real estate once Lehman holds it as REO?
(l-r) Adjunct Associate Professor Andrew C. Jacobs ’96 and competition sponsor Daniele Bodini ’72 with first-prize winners Andrew Stone ’13, Jeffrey Organisciak ’13, and Matthew Giammanco ’13 alongside project sponsor and past first-prize winner Jane Yang ’10 of Lehman Brothers Holdings.
Second Place ($2,700)
|Diego Banos Garcia, Diego Espinosa, Michael Wise, and Xiaoqi Wu|
MREEM and the Opportunity Presented by Public Pension Funds
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Metropolitan Real Estate Equity Management (Dorothy Walter)
As a result of the poor performance of so many private equity real estate managers in the post-GFC era, institutional real estate investors are seeking more control over GP investment decisions, including property-level decisions in the form of co-investments. However, US pensions funds (public and private), foundations, endowments, and family offices have limited resources (e.g., number of investment professionals and travel budgets) to address the increased demands of today’s market. As a multi-manager investor (i.e., fund-of-funds), lay out a global private equity real estate portfolio for each of these investor types. Recommend not just the variables (e.g., property types) for the portfolio line items, but specific managers for those investment categories.
- Articulate the investment goals (returns, risk/reward profile) of each investor type.
- Make a recommendation for each investor type as to how much of their real estate allocation should be invested in private equity real estate versus other real estate investment options (REITs etc.).
- Within the private equity allocation, what strategies are desirable (core, core-plus, value add, opportunistic)? Also make recommendations by property type, manager background, and geographic region.
Daniele Bodini ’72 after the awarding of second place to (l-r) Xiaoqi Wu ’13, Diego Banos Garcia ’13, and Diego Espinosa ’13. (Not pictured: team member Michael Wise ’13.)
Third Place ($1,800)
|Uchenna Akujuo, Adam Cohen, and Hilary Davidson|
[View presentation video... ]
Tishman Hotel Realty Corporation (John Vickers ’85, David Rothenberg, Paul Diamond)
Tishman is pursuing the acquisition of a land parcel in the Streeterville neighborhood of Chicago, just east of North Michigan Avenue, the “Miracle Mile” shopping district. The site is currently in bankruptcy and was originally planned for residential use. Tishman already owns the 1,200-room Sheraton Chicago a few blocks away.
What is the highest and best use for the site? Which property type(s) are appropriate? Who are likely tenants or flags? How does the property’s bankruptcy impact your analysis? Will the city be supportive? How will you finance the project? Who are your investors and how do they drive your decisions as developer?
Uchenna Akujuo EMBA ’13 delivers part of his team’s presentation, with team members Adam Cohen ’13 and Hilary Davidson ’13 standing by.
Fourth Place ($900)
|Richard Benson, Adam DeBoey, Zulekha Inayat, Travis Stabler, and Kraig Tuber|
U.S. Residential Real Estate Investment Opportunities
[View presentation video... ]
Silverpeak Real Estate Partners (Quentin Reynolds)
Silverpeak seeks to have a Columbia Business School student group assess its investment options in the current US residential market. The objective is to form a view as to whether or not the housing market has entered into a sustainable recovery, and then translate that view into an actionable investment strategy. There are a wide number of potential strategies and can be in the form of private real estate assets or public securities (long or short) and could include everything from buying and renting foreclosed homes to exploring options in the RMBS space. The overarching goal is to identify the best risk-adjusted strategy based upon your housing view while achieving Silverpeak’s target IRRs that are commensurate with an opportunistic strategy. The use of “reasonable” leverage is another scope constraint.
Team members Zulekha Inayat ’13, Adam DeBoey ’13, Richard Benson ’13, Kraig Tuber ’13, and Travis Stabler ’13 fielding questions after their presentation.