by Musashi Liu '20
Arranging capital is a fundamental element of real estate investment and development. The Coming to Terms Negotiating Real Estate Joint Ventures Event was hosted at Columbia Business School for the 8th time on Friday, November 22nd, 2019, where over 70 graduate students in business, real estate, law, engineering and planning from Columbia, MIT, NYU, and Harvard gathered for a full day in Uris Hall to participate in discussing the key issues in a real estate joint-venture agreement. The event was co-sponsored by the Paul Milstein Center for Real Estate, the Grosvenor Group, the Columbia Graduate School of Architecture, Planning & Preservation, and the MIT Center for Real Estate and allowed students the unique opportunity to engage with and learn from experienced practitioners from both the legal, finance, and operational sides of the real estate industry. More specifically, this event was designed to focus students’ attention on the key business issues associated with raising the equity capital needed to pursue a realistic (albeit hypothetical) $100 million mixed-use development opportunity.
Jennifer Morgan, Partner at King & Spalding and Adjunct Professor at Columbia Business School, and Tod McGrath ’84, Vice President of Finance at Boston Properties and Lecturer at the MIT Center for Real Estate, opened the event with an introduction to typical characteristics and to overarching business objectives of joint-venture agreements from both the developer and equity partner point of view. The discussion largely focused on four key areas: contributions, distributions (waterfall), governance, and exit. Participants also discussed fairness in joint-venture agreements, as well as a review of a sample project that would act as the focus of the day’s joint venture negotiations.
Following the morning session, students broke out into small teams where they were either tasked with playing the role of the Managing Member (developer) or Investor Member (capital partner) in a Boston mixed-use development based off an actual transaction. The same form of JV agreement was given to each of the student teams where the ten most important provisions in the agreement have been made intentionally unworkable for one or both of the parties. Consequently, there was a lot to discuss in terms of what each party needed from a business standpoint. Students were advised in their groups by practicing attorneys from firms such as: AIG Global Real Estate, Akerman, Boston Properties, DLA Piper, Fried Frank, Goodwin, Goulston & Storrs, and King & Spalding.
After several hours of preparation and review aided by advice from the attorneys, where participants analyzed the deal terms, JV structure, legal documents and devised our respective strategies, the teams went into breakout rooms for negotiation sessions. Judges from prominent real estate investment/asset management firms awaited students in the breakout rooms and offered constructive criticism and reviews of their overall performance. Students found this to be a fantastic opportunity to present in front of a blue-chip set of celebrity judges which included several Columbia Business School alumni and representatives from: Allianz, Boston Properties, Dune Real Estate Partners, Grosvenor, Related Companies, and Tishman Realty. The successful day came to a close with a cocktail party and an evening networking reception where students and professionals were able to mingle and discuss the major takeaways from the day’s negotiations. “Every fall, the Coming to Terms Case Competition is a favorite of the students who are enrolled in the CBS Real Transaction Class and it was great to see that this year it was another success.” Professor Jenifer Morgan.
A special thank you to Tod McGrath ’84, Professor Jennifer Morgan, and the Paul Milstein Center team for spearheading the event, which is now in its 8th year running.
Musashi Liu ‘20 is a second-year student at Columbia Business School and is a VP of Careers for the Real Estate Association. Prior to CBS, Musashi worked as a Senior Associate focusing on capital markets/M&A/strategy for Mill Creek Residential Trust, a vertically integrated real estate developer/investment manager/operator ranked as the 2nd largest US apartment developer. Most recently, he spearheaded Mill Creek’s $650MM M&A transaction with the Arizona State Retirement system and, in the past, has contributed to the successful completion of more than $1 billion of US, Asian, and Middle Eastern capital investments in multifamily, retail, office, and land development. He has prior experience in real estate investment banking and global foreign exchange at Bank of America Merrill Lynch and BlueGate Partners. Musashi graduated from Georgetown University, Bachelor of Arts in Chinese/Business Administration [Sidwell Friends High School], studied abroad at Minzu University in Beijing becoming fluent in Mandarin, and was a student-athlete on the Georgetown University Men's Rugby Team. He is an active member of the Urban Land Institute, the Georgetown Real Estate Finance Initiative, The Real Estate Council, and a core volunteer for Habitat for Humanity.