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By Alex Grant ’18
On Friday, November 17th, 80 students from eight different graduate degree programs within Columbia, MIT, NYU, and Harvard gathered in Uris Hall for the 6th annual Coming to Terms: Negotiating Real Estate Joint Ventures event. Co-sponsored by the Paul Milstein Center for Real Estate, the Grosvenor Group, the Columbia Graduate School of Architecture, Planning and Preservation, and The MIT Center for Real Estate, the event offered participants the unique opportunity to engage with and learn from experienced professionals from both the legal and business sides of the real estate industry.
Jennifer Morgan, Partner at King & Spalding and Adjunct Professor at Columbia Business School, and Tod McGrath ’84, VP of Finance at Boston Properties and Lecturer at the MIT Center for Real Estate, kicked off the event with a role-playing exercise, introducing the riverfront development project that would act as the focus of the day’s joint venture negotiations. With each playing the role of either the Managing Member (developer) or Investor Member (equity partner), the two highlighted the key areas of focus in any real estate joint venture: capital contributions, distributions, decisions around control/governance, and the timing of the exit.
Following the morning discussion, participants broke into six negotiating teams consisting of students from different schools and professional backgrounds, with three teams representing the developer and three acting on behalf of the investing partner. As the teams prepared for the mock live negotiations, they were advised by attorneys from prestigious law firms such Goodwin Proctor, AIG Global Real Estate, DLA Piper, Akerman, Goulston & Storrs, Boston Properties, and Fried Frank.
After a roughly four-hour preparation period in which each team reviewed the legal documents and devised their respective strategies, the three sets of teams went into separate rooms for their mock negotiation sessions. Beginning with the financial structure and return waterfall of the joint venture, each side had an opportunity to not only propose their ideal structure, but also to explain their reasoning in the hopes of convincing their JV partner of the merits of their arguments.
As the teams worked their way down the term sheet, the panel of judges (consisting of prominent industry experts representing firms such as Goldman Sachs, Related, and Lazard) offered their feedback on the performance, suggesting new negotiating tactics and additional items for consideration along the way.
The day concluded with a dinner networking reception wherein students and professionals got the chance to mingle and discuss the major takeaways from the day’s negotiations. “The Coming to Terms event was an amazing opportunity to take what we’ve learned in the classroom and actually apply it in a real-world setting with invaluable guidance from industry experts. I really enjoyed getting to know several other participants over the course of the day, and I would highly recommend this event to classmates pursuing a career in real estate post-graduation.” Jenny Rae Le Roux ’18.
A special thank you to the Paul Milstein Center and Professor Morgan for doing such a great job sponsoring and hosting this event, which is now in its 6th year running.
Alex Grant ’18 is a second-year student in Columbia’s full-time MBA program and is a member of the Real Estate Association.