Arranging capital, a cornerstone of real estate investment and development, was at the heart of the 12th annual Coming to Terms: Negotiating Real Estate Joint Ventures workshop, hosted by Columbia Business School on November 17, 2023. This was a convergence of over 80 MBA, EMBA, MSRED, and Planning students from Columbia, MIT, and NYU. They were there not just to learn but to actively engage in a realistic Joint Venture negotiation, honing skills for their imminent roles as future leaders in the urban landscape.
This event, co-organized by Columbia Business School's Paul Milstein Center for Real Estate and the MIT Center for Real Estate, provided a unique platform for students to interact with and glean insights from experienced professionals in the real estate sector, covering legal, investment, and development angles. The primary objective of the workshop was to focus on the pivotal aspects of real estate investment and development, particularly the strategic management of capital. It aimed to orient students towards the critical business considerations necessary for securing equity capital for development projects. The case included topics spanning contributions, distributions (the waterfall structure), governance, and exit strategies.
The program commenced with a welcome and insightful discussion on the General Business Goals of the Joint Venture Parties. This was led by Tod McGrath '84, Lecturer at the MIT Center for Real Estate and Vice President of Finance at Boston Properties, and Karen Holdridge, Adjunct Professor at Columbia Business School and Senior Vice President NY Regional General Counsel at Boston Properties. This session illuminated key negotiation areas and typical objectives of joint venture agreements from both the developer's and the equity partner's viewpoints. Following this, participants delved into a capital markets-based "profit splits fairness framework" with David Geltner, Professor at the MIT Center for Real Estate.
In the afternoon, students were divided into teams, assuming the roles of either Managing Members (developers) or Investor Members (capital partners). Each team, accompanied by their legal counsel, engaged in deliberations over a joint venture agreement for a 300,000 square foot mixed-use redevelopment. The teams had previously received a JV Agreement with intentionally challenging provisions that were made unworkable for either one or both of the parties, setting the stage for in-depth discussions and counsel from industry leading legal advisors. During these breakout sessions, students had the opportunity to be advised by practicing attorneys from esteemed law firms such as The Related Companies, TMG Partners, The Olayan Group, Leggat McCall Properties, Dune Real Estate Partners, The East Cambridge Co., LCI Investment Company, Senlac Partners, and Boston Properties.
The culmination of this event was a negotiation session where Developer and Investor teams met to negotiate the JV Agreement terms. Representatives from each team advocated for necessary changes, negotiating their positions. This negotiation exercise was observed by celebrity judges from prominent real estate investment and development firms, who provided real-time constructive feedback on overall performance through frequent “team huddles”. The judges hailed from industry-leading firms like Goodwin Procter, DLA Piper, King & Spalding, Boston Properties, Corebridge RE Investors, Shearman & Sterling, John Hancock, and Goulston & Storrs.
“Seeing our students in action during the negotiations is a highlight of the semester for me. Their ability to navigate complex discussions and reach effective agreements underscores the practical impact of our curriculum.” - Professor Karen Holdridge
After the day's rigorous workshop, the students from various schools gathered for a networking happy hour. This was a chance to relax and informally exchange thoughts beyond the day's focus. Discussions veered into a range of topics: from reflections on current market dynamics and personal career aspirations to exchanges about the nuances of their academic programs and emerging trends in the real estate sector. It was an opportunity for these aspiring professionals to share experiences, and perhaps even lay the groundwork for future collaborations.
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Arushi Ray '24 is an MBA student in the Class of 2024 at Columbia Business School, specializing in Real Estate Finance. Currently, she serves as Co-VP of the Real Estate Association at Columbia. Before her MBA journey, Arushi was involved in the proptech industry, wearing multiple hats as both an investor and operator. This was also the driving force behind her own venture, Rayn Capital, focusing on tech-driven investing in residential properties across the United States. Arushi is also a graduate of Babson College (‘18) with a B.S. in Business Administration.