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By Azeem Ahamed ’15
The Paul Milstein Center for Real Estate hosted a full-day, interactive workshop on negotiating real estate joint-venture agreements at Columbia Business School on Friday, October 24. Hosted in conjunction with the MIT Center for Real Estate and Columbia’s Graduate School of Architecture, Planning and Preservation (GSAPP), the event attracted over 60 participants from Columbia, MIT, and Harvard with professional backgrounds ranging from business, consulting, private equity, real estate development, urban planning, law, and public policy. Mentoring the students were some of New York’s top business and law professionals, who helped students understand the key provisions of joint-venture contracts, including overall project risk, risk allocation, governance, and fee and incentive structures. The teams then negotiated those provisions before a panel of prominent industry experts, receiving additional feedback at the conclusion of the negotiation.
Richard Leland, Esq., an Adjunct Professor at GSAPP, kicked off the session and emphasized the importance of students’ ability to understand, interpret, and negotiate joint-ventures in a cross-functional team setting, given the often conflicting interests in the project. “Having the ability to understand what everyone around the table is thinking can help bridge communication gaps and lead to a contract structure that incentivizes all parties to excel”, said Leland at the conclusion of his welcome address.
Jennifer Morgan, Adjunct Professor at Columbia Business School and Tod McGrath ’84, Lecturer and Chairman of the Advisory Board at the MIT Center for Real Estate, followed with a role playing exercise, detailing some of the important issues two sides face when coming to terms on this type of deal, including who contributes how much money and when, how to split the profits and cover any potential losses, and exit strategies. “I like to think of it as, ‘What are we going to do when we want to break up?’” Morgan said.
Following the morning talks, students were divided into four negotiating teams consisting of students from different schools and professional backgrounds, two to represent the developer and two to represent investing partner to deliberate on the specific terms for a joint venture on a hypothetical $100 million mixed-use development. They were advised by attorneys from AIG Global Real Estate; DLA Piper; Fried Frank; and Goodwin Procter. Those private breakout sessions then culminated in two parallel negotiations, judged by over a dozen prominent industry experts. The day concluded with a networking reception at the Business School.
“It was a useful way to understand the intricacies of JV contracts, and the judges’ feedback definitely gave me a new perspective on how to analyze deals”, remarked Joanna Wong ’15 of Columbia Business School. “It’s too bad I’m not going to be able to participate next year. But hopefully can come back as a celebrity judge after a few deals”, said Max Miller, a Columbia MSRED student graduating in spring 2015.
Azeem Ahamed ’15 is VP of Case Competitions for the Real Estate Association, Cluster Chair (Z ’15), AVP for the Non-Profit Board Leadership Program and an active member of the Hermes Society. Prior to joining Columbia Business School, he had experience in management consulting, international development and venture capital. He earned a Bachelors of Sciences in Biotechnology/Economics and a Masters in Business, Entrepreneurship and Technology from the University of Waterloo, and is a Certified Management Accountant. In his free time, he enjoys golfing and is a Muay Thai enthusiast.