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by Shivani Goolab ’21
The 9th annual Coming to Terms Negotiating Real Estate Joint Ventures workshop was hosted by Columbia Business School on November 20th, 2020. Of course, with 2020 being an unusual year, to say the least, the event took place virtually over Microsoft Teams, where more than 70 students from five different graduate programs within Columbia University, MIT and NYU, participated in discussing the key themes and requirements for concluding a successful real estate joint venture agreement.
The event which was co-sponsored by the Grosvenor Group, the Paul Milstein Center for Real Estate at Columbia Business School, and the MIT Center for Real Estate, gave students the opportunity to engage with, and learn from experienced real estate practitioners from the legal, investment and development sides of the industry. Given that arranging capital is a crucial element of real estate investment and development, the aim of this workshop is to focus students’ attention on the key business issues that are associated with raising the equity capital required to pursue a major mixed-use development opportunity. The key issues that were highlighted included: contributions, distributions (the waterfall structure), governance and exit mechanisms.
The day kicked off with a welcome and discussion of the Overarching Business Objectives of the Parties to the Joint Venture by Tod McGrath ’84, Lecturer at MIT Center for Real Estate and Vice President of Finance at Boston Properties, and Jennifer Morgan, Adjunct Professor at Columbia Business School and Partner at King & Spalding. The session offered students context into the key negotiating areas and typical objectives of joint venture agreements from the developer and equity partner points of view.
Following the introductory session, participants walked through a capital markets-based joint venture “profit splits fairness framework” with David Geltner, Professor at MIT Center for Real Estate.
The afternoon sessions had students entering their team-specific—Managing Member (developer) or Investor Member (capital partner)—breakout rooms with their legal counsel, to deliberate on a joint venture agreement for a 300,000 square foot mixed use redevelopment (a realistic but hypothetical opportunity). Prior to the workshop, each team was provided with the same form of JV Agreement where key provisions were made intentionally unworkable for either one or both of the parties. This gave teams the opportunity to hold in depth discussions and obtain guidance from their astute legal counsel on what each team would require from a business standpoint. During these breakout sessions, students had the incredible opportunity to be advised by practicing attorneys from Goodwin Law, AIG Global Real Estate, John Hancock/Manulife, DLA Piper, Akerman, Fried Frank, King & Spalding, Boston Properties, and Goulston & Storrs.
Several hours of preparation on respective negotiation strategies and analysis of the deal terms, joint venture structure, and key provisions in the legal documents culminated in the Developer and Investor teams meeting in a separate “negotiation” breakout room. While there, representatives from each team put forward their business case for required changes to the JV Agreement and negotiated their positions, while celebrity judges from prominent real estate investment and development firms provided constructive feedback on overall performance. Being able to present in front of industry experts from firms such as Brockton Everlast, Carr Properties, Grosvenor, TMG Partners, CPPIB, Finback Real Estate, Allianz, Related, Lazard Freres, Dune Real Estate Partners, JP Morgan IM, BRP Companies, and Milestone Partners was an incredible opportunity for each of the students that attended. Additionally, given the virtual format, it was especially advantageous to participants to be able to hear from judges in several countries; a unique feature of this year’s workshop.
“It is so rewarding to see the students negotiate on their feet, and successfully put into action the concepts we address throughout the semester.” Professor Jennifer Morgan.
After wrapping up the negotiations, all participants were able to mingle in a virtual “happy hour”, where there was much discussion of current market dynamics, advice for students on their careers and discussion of the day’s major takeaways.
A huge and special thank you goes out to Tod McGrath ’84, Professor Jennifer Morgan, Bani Kaur of the MIT Center for Real Estate and the Paul Milstein Center for Real Estate for organizing such a wonderful event, even under these unique circumstances!
Shivani Goolab ’21 is an MBA student in the Class of 2021 with a concentration in Real Estate. She serves as Co-VP of Development on the Board of the Columbia Women in Business Society. Prior to Columbia, Shivani worked as a Relationship Manager in the Structured Property Finance division of Investec Bank plc in London, UK, where she was responsible for origination and management of a debt and equity portfolio across several real estate sectors. Shivani is a Chartered Accountant and graduated from the University of Cape Town in 2011 with a post-graduate diploma and B.Bus.Sci. degree in Finance and Accounting.