Sydney – REA Chazen Trek – March 2023

By: Brendan Keen ‘24

One of the many fun moments that occurs upon leaving the workforce and becoming a born-again student is when you realize that you get another chance (or two) to enjoy spring break. In MBA world, spring break plans happen early, and they happen fast - before I had even taken my first exam in the fall, I committed to helping organize a large spring break trip to a place I had never been before located on the other side of the world. While the opportunity to go somewhere new and learn about an international real estate market was obviously exciting, I did not fully appreciate at the time how impactful and memorable this trip would be.

A far cry from my spring breaks as an undergrad exploring the beaches of Gulf Shores, Alabama, the REA’s 2023 trip to Sydney, Australia grew me both professionally and personally and left me full of lifelong memories with amazing people that are going to go on and do much cooler things than I will.

Thank you to my fellow trip planners PJ Carollo (’23), Richard Alty (’23) and Ned Yale (’24) for always making planning this trip fun and easy.

Thank you to Professor Brian Lancaster and Kristin Svenningsen, Managing Director of the Paul Milstein Center for Real Estate, for your guidance throughout and for being such value adds during our time in Australia.

Thank you to Melissa Spooner and the Chazen Institute for making the trip possible in the first place.

Thank you to all our industry and alumni hosts who supported this very valuable learning opportunity.

Lastly, thank you to the group of 28 CBS students, and now my 28 friends, that made this trip everything that it was!

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This trip was originally supposed to happen in the Spring of 2020. Professor Brian Lancaster and some students at the time had helped the then Australian Consulate General, Alastair Walton (’87), with a feasibility study for an Australia House in New York (more about that here). In return for their good work, Mr. Walton helped Professor Lancaster plan a real estate study tour to Australia. Unfortunately, COVID happened and the whole thing was put on hold.

Fast forward to Fall of 2022 when my fellow trip planners and I had the benefit of picking up where our counterparts left off. Through months of hard work and planning, we were able to bring to fruition a trip that I think we are all proud of.

In our short seven-day stint in the land down under, we met with eight incredible companies spanning a broad range of perspectives in the real estate, infrastructure, and banking industries. We were greeted by and had the opportunity to network with Australia-based CBS alumni working in a variety of businesses. We climbed a big bridge, visited Blue Mountains, road a roller coaster, met koalas and kangaroos, listened to Vivaldi’s Four Seasons, cruised the Sydney Harbour, and spent plenty of time on the beach.

It was a memorable trip to say the least, and one that I am so grateful to have had the opportunity to participate in.

Company Visits

Company Meeting 1 | Dexus

Speaker(s):  Andy Collins, Group Head of Transactions & Development

About:  Dexus is one of Australia’s leading vertically integrated real assets fund managers, actively managing a real estate and infrastructure portfolio valued at over $60 billion AUD.

Topics of Discussion:  Future of office in Australia and Dexus’ movement into the infrastructure space

Company Meeting 2 | CBRE Investment Management

Speaker(s):  Sandy Padilla (CBS ’08), APAC Head of Research

Chris Johnston, Managing Director Investments

About:  CBRE Investment Management is a leading global real assets investment management firm with $149+ billion AUM and 30 offices worldwide.

Topics of Discussion:  General market overview, impacts of inflation and rising rates, and emergence of build-to-rent residential as a product type in Australia

Company Meeting 3 | Commonwealth Bank of Australia

Speaker(s):  Michael Thorpe, Head of Future Cities and Networks

About:  CBA is an Australian multinational bank with businesses across New Zealand, Asia, the US, and the United Kingdom. CBA is the largest real estate lender in Australia

Topics of Discussion:  CBA’s new ecosystem based corporate structure, urbanization in Australia, green financing in real estate and infrastructure projects, and public vs. private roles in shaping the cities of the future

Company Meeting 4 | Blackstone

Speaker(s):  Mark Harrison, Managing Director Real Estate Private Equity

Matt Koskinen, Managing Director Real Estate Private Equity

Paige Muggeridge, Principal Real Estate Private Equity

About:  Blackstone is a global real estate investment manager with $326 billion in capital under management and a real estate portfolio valued at $577 billion

Topics of Discussion:  Blackstone’s Australian investment strategies and its approach to entering new product types and/or market segments such as build-to-rent residential

Company Meeting 5 | Brookfield

Speaker(s):  Scott Mugglestone, Vice President of Investments

Phillip Naylor, Director of Developments

About:  Brookfield is a global fund manager with $263 billion real estate portfolio

Topics of Discussion:  Case Study of the development of Brookfield Place Sydney

Company Meeting 6 | Aliro Group

Speaker(s):  David Southon, Executive Chariman

Daniel Wise, Managing Director & CEO

Oscar Zerbst, Director Asset Management & ESG

Kevin Kuechler, Senior Transaction Manager

About:  Aliro is a private, vertically integrated fund manager based in Australia with ~$1.6 billion AUD capital under management

Topics of Discussion:  David & Daniel’s experience leaving larger institutions and building a private fund management business, entrepreneurship in real estate, and Aliro’s approach to ESG

Company Meeting 7 | Lendlease

Speaker(s):  Neil Arckless, Development Executive

About:  Lendlease is a globally integrated leading real estate developer with notable projects across the world.

Topics of Discussion:  Case study & walking tour of Darling Square, Barangaroo, and One Sydney Harbour; general focus on placemaking in development

Company Meeting 8 | Macquarie Asset Management

Speaker(s):  Brett Robson, Head of Real Estate

James Kemp, Head of Real Estate Asia-Pacific

Kate Herfort, Executive Director Client Solutions Group

David Roberts, Associate Real Estate

Charles Griffith (CBS ’16), Director Real Estate

About:  Macquarie Asset Management has a global real estate investment business with $17+ billion AUD in AUM

Topics of Discussion:  Macquarie’s thematic sector approach to investing and its focus on growing emerging operating platforms

Other Fun Stuff

Company Visits & Site Tours

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CBS Alumni Reception

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Bridge Walk, Koalas & Kangaroos, Roller Coasters, Blue Mountains, Boat Cruise, Beaches, etc.

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The Crew!

Buenos Aires - REA Chazen Trip - May 2022

By: Benjy Goldberg ‘23

When I was applying to MBA programs, I vividly remember speaking to CBS alum Mike Ferry (CBS ’06), and hearing how impactful it was for him to travel abroad with the Real Estate Association (REA) to learn about markets outside of the U.S. I was intrigued - from a learning perspective, but also for the opportunity to build strong relationships with fellow students and faculty. And so, when joining the REA at CBS, I took on one of the AVP of Treks roles to have a hand in planning one of these trips.

With the onset of the Omicron COVID-19 variant at the end of 2021, however, the prospect of international travel with a large group was nothing but uncertain. When our Treks team (Dani Glouberman (’23), Bryce Cason (’22), Sam Mitrani (’22), and me) finally got the green light to bring a cohort of students to Argentina in May 2022, we hit the ground running planning company visits and cultural excursions.

After months of itinerary planning, outreach to companies, and marketing to students, our trip was finalized. With the support of Chazen, the Paul Milstein Center and our trip’s faculty member, Professor Brian Lancaster, our group of 25 MBA students were off to Buenos Aires.

Argentina presented a unique opportunity for students interested in real estate to see how real estate deals came together in manners vastly different from those of the U.S. To illustrate one example, in real estate finance at CBS we learn in the first class about the power of leverage and its impact on return metrics. In Argentina, the concept of leverage is essentially non-existent. Condo development projects are financed through pre-sales. There is effectively no mortgage industry, with home buyers purchasing properties all in cash.

These differences, coupled with Argentina’s history of hyperinflation (talk about relevance), kept our group consistently curious and asking questions during company visits. We had the pleasure of being hosted by a diverse set of eight companies in the real estate industry. Their focus areas included urban/suburban development, private equity, brokerage, office & retail, co-working, government housing, and cross-border transactions.

When we weren’t learning from Argentina’s industry leaders, we made sure to make the most of Argentina’s vibrant culture. From attending a futbol match to learning Tango to experiencing traditional Asado (Argentinian barbeque) to visiting an estancia (ranch) in the countryside, there was never a dull moment. Even the process of exchanging our USD to Argentinian Pesos gave us the ultimate immersive Argentine experience.

As I look back on the experience we had in Argentina – the opportunity to learn about real estate in another market, the opportunity to build relationships with companies, peers, and faculty, and the opportunity to immerse in another culture – I feel immensely grateful to everyone that made this trip happen. This will always be a defining memory of my CBS experience.

Benjy Goldberg is a 2nd year MBA student at CBS focused on real estate. This past summer, he interned with Greystar in Atlanta on their development team. The REA’s Chazen Trek this coming Spring will be in Sydney, Australia.

Distinguished Speaker Series featuring Kathleen McCarthy

By: Richard Alty ’23, Deirdre Steel ’23, Daniel Vasserman ’22

The Paul Milstein Center for Real Estate at Columbia Business School recently hosted Kathleen McCarthy, Global Co-Head of Real Estate at Blackstone as part of their Distinguished Speaker Series. In a moderated conversation led by David Sherman ’82, Co-Director of the Milstein Center, Kathleen provided her thoughts on the pandemic, what Blackstone is focused on right now, industry and economic trends, and provided advice for MBA students beginning their careers in the real estate industry.

Although the pandemic has entered its third year, it continues to impact how we live and work. 

For Kathleen, this meant juggling her personal and professional lives, adjusting to a new normal, and the occasional guest appearance on Zoom from one of her young daughters. And while her team has been extremely productive during this time, there is no substitute for the benefits of being in the office, especially for young people. At Blackstone, the firm culture thrives on collective insights, sharing of information, and apprenticeship. Whether in or out of the office, Kathleen put it best when she said, “life is just delivered better in-person”. 

Shifting gears to Blackstone’s strategy for real estate, Kathleen discussed how the firm employs a high-conviction, thematic approach to investing. They take a holistic view of the world, look at macroeconomic trends, follow societal changes, and then invest in the real estate that will benefit from these changes. An example of this was when Blackstone realized early on that changing consumer preferences from traditional television towards streaming platforms like Netflix would create increased demand for new programming and content and therefore began investing in studios lots and adjacent office buildings in cities like Los Angeles.

Another key characteristic of the firm’s strategy is investing through a global lens. This allows them to identify what trends are sticking and in which parts of the world. Most recently this has been evident in how the “future of work” will look. In the U.S., work from home policies have largely succeeded for certain firms and so there is consensus in the industry that some sectors or jobs will continue being remote or hybrid. Whereas in certain other parts of the world, working from home may not be as feasible due to factors such as smaller living quarters, for example. As a result, workers in these regions are coming back to the office just as they did pre-pandemic and so these office markets may not be impacted as much coming out of the pandemic.

On the economy, Blackstone has positioned itself to be well prepared for inflation and a rising interest rate environment. They primarily invest in markets with strong demand, which contributes to high cash flow growth, rather than just relying on multiple expansion and most of Blackstone’s current real estate investments tend to have relatively short leases (e.g., industrial and multifamily). Kathleen also pointed out that inflation further inhibits supply as material and labor costs rise. 

Additionally, Kathleen noted that current challenges for borrowers in some real estate asset classes like retail and hotels, was creating an opportunity in the market for well-capitalized firms looking to invest. Although there has been hesitation to finance office acquisitions, Kathleen championed a more nuanced approach: she proposed that we face a bifurcated market in which second-tier offices will face challenges in the near term, but best-in-class ones will continue to benefit from strong demand. At the moment, Blackstone’s appetite for real estate is staying firmly within the physical world. Kathleen opined that the real estate that creates the most value over time has been a place you can go to, exists in limited supply and is located in a unique place. 

When asked to share insight to business school students looking to make the most of the next 5 to 10 years of their career, Kathleen’s advice was simple: “Work hard, demonstrate good judgment, care a lot about the work you do, and good things will happen”. If you do these three things, people will bring you in to work on many projects and opportunities and many doors will open for you along the way. Kathleen also advised the group that there is no such thing as wasted time in the early part of your career. Everything you do is a valuable learning experience and will be useful later on. Kathleen shared that earlier in her career, she was in an investing role and was tapped to help with a fund launch. Although this seemed like a career detour for her at the time, it turned out to be a fantastic learning experience that offered the opportunity to work closely with very senior members of the organization, and eventually lead to an opportunity to join Blackstone’s capital raising team. Kathleen’s parting thought to the students was to soak up all your experiences because they accumulate to who you are as a professional.

Fall 2021 Real Estate Debt Panel Hosted by the Paul Milstein Center

On December 2nd, I virtually attended the Fall 2021 Real Estate Debt Panel hosted by the Paul Milstein Center for Real Estate, for students interested in the various debt functions across real estate. It featured accomplished panelists with a wide range of roles and experiences in real estate debt, including Managing Director and Head of Global Debt Solutions at PGIM Real Estate, Jacqueline Brady, Managing Director within the Commercial Real Estate Debt Group at Apollo Global Management, Catherine Chen ‘10, and Senior Managing Director in the Real Estate Debt Strategies Group at Blackstone, Michael Wiebolt '16. Insights were also provided by moderator and Senior Lecturer, Brian Lancaster.

The conversation began with each panelist giving a brief recap of the past 18 months in real estate debt markets. Consistent with much of the lending community, originations and new opportunity underwriting grinded to a halt in the early days of the COVID-19 pandemic as the focus shifted to working out existing loans with borrowers. However, our panelists’ investment mandates, liquidity, and thoughtful upfront structuring enabled them to navigate this turbulent time and look forward to opportunities.

Reflecting on past downturns like the Great Financial Crisis, many investors promise themselves they will not let another opportunity to acquire oversold assets pass them by. However, many did not have the chance to act during the COVID-19 brief downturn as policymakers acted extremely quickly, flooding the market with unprecedented levels of liquidity, with Jacqueline Brady saying, “downturns are getting shallower and shallower.” Despite tightening spreads, our panelists were able to identify, what they viewed as, attractively priced opportunities by capitalizing on differentiated structuring capabilities, pursuing niche asset classes, and being selective in distressed parts of the market. Since the beginning of the pandemic, investors have been rewarded for selectivity as dispersions in performance across asset classes, markets, and positions in the capital stack have increased. To illustrate this point, Catherine Chen pointed to hotels, “many destination resorts are experiencing record years while hotels that cater to corporate travel remain under pressure.”

While many investors are using this time to be selective, the historic amount of liquidity in capital markets have generally supported valuations across the board. While analyzing relative risk and reward, Michael Wiebolt believes analyzing real interest rates (net of inflation) is critical in understanding how assets are being priced on a relative basis. With inflation rising, risk-free rates are flat to negative yielding, fueling additional demand for risky assets - Michael refers to this as, “the crushing weight of capital on risk premiums.” Michael and his team are closely watching industry capital flows across various asset classes as sustaining this level of liquidity is needed to continue to support these valuations. These levels of liquidity and the tightening of spreads in the US has also driven investors to European subordinated debt markets to take advantage of wider spread premiums.

The discussion concluded with each panelist providing career advice for students looking to enter the industry. While there were many insightful takeaways, my top three were:

• Lending is About Scale – look to work at a shop with a very active platform. Getting into the right organization where you can gain exposure to the most diverse set of deals and professionals will provide a learning experience that positions you for a great career.

• Deepen Your Understanding of Debt Markets – as real estate debt markets expand with more participants, products, and strategies, it is increasingly important to know how capital is used behind the scenes; property-level underwriting and the securitized public markets are more connected than ever.

• Do Something that Went Bad – each panelists’ greatest learning moments came in uncomfortable, difficult times. Having the perspective to analyze and learn from the situation in real-time will make you a better investor long-term.

The panelists ended the discussion around careers on a positive note – saying, “it’s a great time to be graduating now.”

Thank you to our panelists and Professor Lancaster for an incredibly engaging, insightful conversation.

Written By: Jack Davis ‘22

REA Members Attend CREtech New York 2021 Conference

After over a year of virtual conferences, CREtech was thrilled to return to a live, in-person event, held at Pier 36 in New York City on October 13–14, 2021. The CREtech organization is designed to “help the real estate industry embrace, adopt and future-proof their businesses.” The two-day conference featured networking, panels and presentations from pioneers in the real estate, venture capital, climate, construction, finance and technology sectors. The common goal pervading the conference was driving increased adoption of technological innovation within real estate–the worlds’ largest asset class.

Throughout the conference, key themes highlighted within the real estate technology/PropTech sector included:

Climate tech

As the risks from climate change grow exponentially, real estate companies and investors further emphasize the financial and moral case for investing in sustainability and environmental social governance (“ESG”).

Future of the workplace and the reimagined office

The post-COVID workplace environment will undergo fundamental reinvention to address the tenants’ health needs and desire for flexibility.

The data revolution

Improving the access to and implementation of data for acquisition/leasing deal flow, tracking of metrics, energy management, etc. will enable real estate companies to gain a competitive advantage.

Tech solutions for affordable housing

New technologies (i.e. modular construction) can reduce housing costs, thereby increasing access to affordable housing.

The multifamily experience of the future

Tenant retention and satisfaction via streamlined digital experiences and onsite amenities facilitates significant cost savings (i.e. decreased turnover costs).

Nearly 100 commercial real estate and innovation leaders who are ‘Reimagining Real Estate’ were in attendance, with featured speakers including, but not limited to:

PropTech Companies:

Andy Florance, Founder and CEO, Costar Group

Chase Garbarino, Co-founder and CEO, HqO — Developer of a professional tenant experience platform designed to connect people to places, experiences and each other

L.D. Salmanson, CEO and Co-Founder, Cherre — Developer of a SaaS-based financial database platform intended to collect and augment real estate data from public, private and internal sources

Nick Romito, Founder & CEO, VTS — A single platform for leasing and asset management

PropTech Venture Capitalists:

Brad Greiwe, Co-Founder and Managing Partner, Fifth Wall — The largest venture capital firm focused on the global real estate industry and property technology for the Built World

Raj Singh, Managing Partner, JLL Spark — a global venture fund investing in early to mid-stage property technology startups

Real Estate Companies:

Mark Schwartz, Former Vice Chairman, Goldman Sachs

Anthony E. Malkin, Chairman, President and Chief Executive Officer, Empire State Realty Trust, Inc.

John Fitzpatrick, Managing Director and Chief Technology Officer of Alternative Asset Management Technology, Blackstone

Scott Evans, Chief Digital Officer, The Related Companies

Overall, a positive and optimistic sentiment ruminated amongst the conference attendees–it is an exciting time to be involved in PropTech as the real estate industry is ripe for technological disruption.

Written By: Kennedy Shields ‘23

Distinguished Speaker Series with Tim Berry '13 Hosted by the Paul Milstein Center

On November 10th, the Paul Milstein Center welcomed Tim Berry as part of the distinguished speaker series. Tim is the CEO of Pennybacker Capital, a real estate private equity firm that he started right after business school. The firm invests in and operates middle market multifamily, office, and retail assets in sustainable U.S. growth markets.

Tim shared his journey before and after launching Pennybacker. He started his career in consulting, moved to investment banking, and then started a software development business. He knew that he wanted to run a company, but he also knew that he had to make every mistake possible early in his career.

Tim came to CBS with the idea of building a private equity firm, therefore he tailored his MBA experience to acquire knowledge and build relationships that would allow him to do so. He pointed out how the relationships with professors, students and alumni have been key to the ideation and success of Pennybacker.

One of the many interesting questions Tim answered was how he raised funds for a new firm. He mentioned that the hardest moment was raising his first fund ($29m). He mentioned you need to have a solid investment theory where every dollar is properly allocated towards the success of the firm. After the first fund you build a reputation, and every subsequent fund becomes easier to raise based on the firm’s reputation.

Tim finished his conversation pointing out that the key to success in the Real Estate industry is the use of data and analytics to determine industry and market trends, as well as lessee specific needs. He mentioned that he does not believe Pennybacker to be a Real Estate company, he thinks of the firm as a Tech firm that does RE investing, and points to this as their competitive advantage.

Written By: Luis X Rodriguez Aleman

Prop Tech Panel Hosted by the REA

Prop tech panel fall 2020

On October 29th, the REA hosted a Proptech Event featuring three distinguished panelists: Gary Kao - VP of Business Development & Operations at Dealpath, Prasanth Ramanand - Head of Product Digital Marketing & Marketplace Product Offerings at VTS and Lisa Cations - Head of Enterprise Solutions, EMEA at Hana (a CBRE company).  The panel was moderated by Tomasz Piskorski, Edward S. Gordon Professor of Real Estate in the Finance Division at CBS.  Professor Piskorski also teaches Proptech and Real Estate Disruption during the Spring semester. The event was open to both first and second years with the goal of providing insight into different areas of proptech and the many possibilities for leveraging technology to transform the future of the industry. Prior to CBS, I worked at a proptech startup focused on simplifying the way that people buy and sell homes. I am interested in pursing a career post-MBA in the proptech space as well so was very eager to hear from our panelists during the event.

Each panelist represented a different angle from which to apply technology to traditional real estate processes. At Hana, Lisa Cations focuses on providing solutions for landlords and occupiers to increase flexibility in currently operationally intensive asset management models. She is interested in bringing customized, tech-enabled workplace experience offerings to clients and sees ‘flex’ as a high-growth opportunity within Proptech.  At VTS, Prasanth Ramanand is focused on digitizing the entire leasing process and improving it through real time data collection and analysis.  Gary Kao is focused on aggregating deal pipelines and improving execution through workflow collaboration and increased process consistency at Dealpath, which operates as a real estate cloud-based deal management platform (founded in 2014).

In addition to what our panelists covered, I am particularly excited about leveraging big data in underwriting properties and gathering historical information to improve decision making, the possibilities around AI and machine learning in acquisitions and property management, virtual and augmented reality in real estate development, and process improvements throughout the industry with the emergence of Internet of Things and 5G.

All three panelists spoke animatedly about the infinite ways to improve the industry through technology and were eager to speak to CBS students about opportunities. My key takeaways were:

1.      Real estate is the largest physical asset class and the industry has been historically low tech, meaning that there are immense opportunities for disruption and improvement.

2.      CBS MBAs are well positioned to accel in proptech because of our unique ability to understand both the tech and business side of the equation. There is also an opportunity to accelerate our careers more quickly in this area right now than more traditional sectors.

3.      For those of us without prior industry experience, a career in proptech often provides exposure to many different types of real estate and the problems they are experiencing.  This allows us to develop an aggregated, wider view of the industry.

4.      The role of analysts and investment professionals will certainly change with automation, but this will also force the industry to become more complex and will create a need for more complex decision making (#CBSMBA).

5.      One key to implementing tech adoption in real estate is effective change management.  Understanding and being empathetic to what each sector/company is trying to accomplish and understanding that people and processes go hand in hand with technology will help us to be successful.

Written By: Caroline Giroux ‘22

Real Estate's Many Avenues

Careers in Real Estate Workshop Fall 2020

On September 11, the Paul Milstein Center hosted an event with Executive in Residence Leanne Lachman and Jane Ezersky from Claremont Search Advisors to introduce first years to different career paths within real estate. As a career switcher, I was really excited for this event given I was somewhat daunted by the breadth of real estate functions and career paths coming in.

The career paths discussed during the event included development, debt, equity, consulting, corporate facilities, proptech, and public agencies. For each area, Leanne and Jane described what each function looked like and examples of firms that do those functions. I learned that as a career switcher, it is important to think as broadly as you can about real estate, as the goal is to get an internship in real estate, but that mortgage underwriting or investment sales are the great ways for career switchers to start. Leanne said mortgage underwriting is great training for career switchers because you get to learn the ins and outs of each land-use and get to see a broad variety of projects. Investment sales allows career switchers to get experience running the models for transactions and interacting with buyers to start to understand how they think about acquisitions.

One of my biggest takeaways from the session is that because the real estate industry is so broad, there is something for everyone. I had always heard about acquisitions and development, but this my eyes to just how many different roles there are in real estate. My other takeaway from the event was that it is important to start networking now! There are a lot of postings for summer internships, but less postings for full time positions, so the networks you form over the course of your first year are very important in helping you to secure a full time job in real estate.

Written By: Danielle Ng

Fall 2020 Open House Panel Hosted by the Paul Milstein Center for Real Estate

Virtual Fall 2020 Real Estate Open House

On September 9th, I virtually attended the Fall 2020 Open House Panel hosted by the Paul Milstein Center for Real Estate, for students interested in studying real estate here at CBS. It featured panelists with a wide range of roles and experiences in real estate, including Co-Director of the Milstein Center for Real Estate, Chris Mayer, Executive-in-Residence, Leanne Lachman, Managing Director of the Milstein Center for Real Estate, Kristin Svenningsen, and REA Co-Presidents Jessica Rosner ‘21 and Lisa Weingarten ‘21. Insights were also provided from Milstein Center Co-Director David Sherman ‘82, Professor Brian Lancaster, and Professor Stijn Van Nieuwerburgh.

The panel highlighted all of the resources available for students looking to go into real estate, whether they have a ton of prior experience or none at all. As a first year MBA student who does not have much prior experience in real estate, I appreciated the candid insight from all of the panelists. Luckily, the program is designed to enable students to switch from completely different career paths into real estate. Because first years cannot typically take any real estate courses in their first semester, I learned that joining the REA is an absolute must to get connected to the real estate community at CBS and start learning the skills you need for a summer internship. It was great to hear that everyone who wanted an internship in real estate last summer got one -- a true testament to those at the Milstein Center and the REA!

Here are some of my key takeaways from the panel:

• Join the REA in your first semester.

• Take the RE Finance course ASAP -- it’s the foundation course for the rest of the RE classes.

• There are 13 amazing RE electives, but don’t take all of them! Round yourself out.

• The CBS RE Alumni network runs deep. You are in for life!

• Being in NYC gives us access to firms in NYC that other schools don’t get.

• If you have any amount of interest in a career in real estate, set up an EIR appointment with Leanne Lachman!

• COVID-19 is creating a lot of distress, but also creating opportunities for disruption.

And most importantly:

• Real estate is going to be different, but it’s not going away.

This panel got me excited to start diving into the CBS real estate community. I walked away feeling much more confident on the steps I need to take as a first year MBA student interested in real estate. Thank you to everyone at the Milstein Center and REA who worked tirelessly over the summer to prepare for all of the incoming students this year! I look forward to working with you and attending many other amazing events throughout this unprecedented year.

Written By: Melissa Blotner ‘22

Real Estate in the Age of COVID-19 Event: Impact on Development, Financing and Acquisitions

On August 4, the Real Estate Association (REA) in partnership with several incoming Class of 2022 students, hosted a timely virtual event, Real Estate in the Age of COVID-19: Impact on Development, Financing and Acquisitions. The event was structured as a panel discussion that explored the impacts that the ongoing pandemic was having on transaction underwriting on both the debt and equity sides. The panelists included Stephanie Sarkar, a Senior Investment Analyst at Manulife Investment Management, William D’Avella, a Development Manager at BFC Partners, and Darshak Shah, a Relationship Manager at Wells Fargo. Philip Zhou, a Class of 2021 student and Vice President of EMBA with the REA moderated the panel.

The impetus for this event was to give current and incoming real estate focused students the ability to hear from industry professionals who are seeing firsthand the changes that the pandemic is having on commercial real estate. Topics covered included the change in underwriting criteria used by banks, the shift in dynamic between lenders and developers, and the impact on a property’s cash flow and value as a result of the pandemic.

I especially enjoyed how varied each panelists’ background was as it made for a robust and wide-ranging discussion. On the principal side, William mentioned that his company was keeping busy through the pandemic with an active pipeline of deals. It was interesting for me to hear that there was still active deal flow in the market as many traditional sources of capital had dried up over the last few months. Both Stephanie and Darshak mentioned that although they are open to new transactions, they have primarily been focused on servicing their existing portfolios. Lastly, all the panelists agreed that debt financing has never been more attractive in the market. With most major indexes such as LIBOR, US Treasury Yields, and the Prime Rate sitting at or near 30-year lows, it is easy to see why!

Written By: Daniel Vasserman ‘22

Real Estate Association Panel Discussion Held For Incoming Students

On July 15, I tuned into a panel discussion that included six second-year members of the CBS Real Estate Association (“REA”). The purpose of the conversation was to provide a primer on the opportunities afforded by a career in commercial real estate (“CRE”) investment for the benefit of incoming MBA candidates like myself as well as to survey the resources provided by CBS intended to assist with professional development and the recruiting process. I was pleased to see that a broad array of CRE business functions were represented by the panelists, including acquisitions, asset management, debt, development, investment banking, investor relations, portfolio management and private equity. With my background in the latter two, I very much appreciated the opportunity to learn more about the recruiting experiences of panelists Lisa Weingarten and Matt Giannuzzi who are interning in the development space as that is, in large part, my desired post-MBA role. 

Similarly, my classmates and I were reassured to learn of the compendium of interview questions compiled by prior and current REA students for the benefit REA members. In addition to this resource, panelists touched upon other media REA members can leverage to obtain a fulfilling internship experience including student mentorship, synergies with the Paul Milstein Center and CMC and tutoring services. I was surprised to learn that modeling tests were not necessarily constitutive of the interview processes for most of the panelists, instead modeling tests were more so limited to the private equity roles, which I have experienced firsthand.

Finally, I appreciated the panelists feedback on how to approach the new academic year from a preparedness perspective. For instance, given the central role of enterprise recruiting for CRE internships, the panelists suggested we start reaching out to the CBS alumni network to begin the process of scheduling coffee chats to learn more about CRE firms and job functions as soon as possible. Several students highlighted the importance of approaching the MBA experience with an open mind as well—cognizant that the in and out of the classroom experiences we will have at CBS will most likely modify the plans we had set out in our applications. In the end, I left the call feeling energized about the REA, CBS and am very much looking forward to formally commencing the academic year.

Written By: Nicholas Szuch ‘22

Virtual Site Tour of an Affordable Housing Development in Brooklyn

NYC Economic Development Corporation Site Tour

On Friday, July 10, the REA had its first virtual site tour of the summer. Gbenga Dawodu, Douglas Land, and Ricky Da Costa of NYC Economic Development Corporation spoke to the REA about their Flatbush Caton Market Project.

The project is a 100% affordable housing development in Brooklyn’s Flatbush section, a Caribbean neighborhood centered around a thriving market. Our presenters described the evolution of EDC’s role as the City’s project manager for complex developments and financing. They then described the project’s genesis as a community market and then as an affordable housing target site.

After sharing renderings and floorplans, the presenters revealed the project’s sources (9 separate funding methods, from federal money to City Council funds) and uses. Then the speakers discussed the future of affordable housing specifically and EDC more generally in a post-Covid world. They welcome inquiries from students; please reach out to Maureen Devenny (mdevenny21@gsb.columbia.edu) for their contact information.

Written By: Maureen Devenny ’ 21

Talk with David Neithercut '82, Retired CEO of Equity Residential

David

Neithercut

Retired Equity Residential CEO

On Monday morning, retired Equity Residential CEO David Neithercut ‘82 spoke about his career and offered advice to current CBS students and recent alumni.  David began his career selling books for Prentice Hall after graduating from St. Lawrence University. While he quickly realized the job was not for the long term, David said that the sales experience paid dividends later. 

After graduating from Columbia, David joined the real estate department at Continental International Bank in Chicago.  At the time, Continental International was one of the largest real estate lenders in the country, and David was drawn to the wide range of experience that the position offered—he lent directly, worked on syndications and looked at all asset types—and it was in this role that he began working with Sam Zell and Equity Group.

As the real estate recession deepened in the early 1990s and traditional sources of financing dried up, David joined Equity Group to help refinance its portfolio.  This process culminated in a series of IPOs in 1993 and ultimately saw David transition to being Equity Residential’s CFO in February 1995.  David became EQR’s CEO in 2005, a position which he held until his retirement in September 2018.  During his time at EQR, the business grew from an $800MM enterprise owning 22,000 apartments to one that owned 230,000 and was worth $45B at its peak. 

Looking back on his experience, David highlighted Sam Zell’s foresight and focus on cultural as keys to EQR’s success.  He also credited EQR’s board with pushing him to grow as a leader so that he could ultimately become a successful CEO.  A weeklong session at the Center for Creative Leadership was particularly formative for emphasizing that strengths could become weaknesses as he rose in the organization and that a CEO has to make sure to keep his or her headlights up—if you have to dig too deep into a particular area of the business, you probably have the wrong person in the role.

Written By: John Millet ‘21

Interview of Sam Zell, Founder and Chairman of Equity Group Investments

Sam Zell

Founder & Chairman of Equity Group Investments

On July 8, 2020, Sam Zell gave an interview as part of a REIT leadership series being hosted by the NYU Schack Institute of Real Estate.  Sam started the interview by sharing his overall thoughts on the current state of the US economy.  He believes that in spite of the covid-19 pandemic, the US economy is in better shape than people give it credit for, but that a best, we will see a U-shaped recovery.  The gains in the stock market are being driven by a handful of FAANG stocks and the comparatively poor returns being offered by other asset classes (i.e. there is nowhere else to put your money).  

Regarding covid-19, Sam believes that getting a vaccine even a year and a half from now (July 2020) would be an extraordinary achievement.  Absent a vaccine, we need to focus on improving medical treatments in order to make the virus comparable to a bad case of the flu, as opposed to a life-or-death situation.  He is optimistic that by September 2020, it will be clear that the death rates from covid-19 are going down due to better treatments.  He believes that reducing the severity of the virus is the most important thing needed to get our lives moving again.  He is optimistic that we will not have a relapse of the virus in the fall/winter and is hopeful that what we are seeing right now in terms of virus growth are incidents being brought forward from 4Q 2020.  His current feeling is that we are close to the end of the peak of the virus and that things will get substantially better by the end of the year.  He believes that the death of cities is overexaggerated and that cities will survive just fine; students want to graduate and live in 24-7 cities, not in the middle of nowhere.

Sam then spoke about the state of his various business holdings.  Currently, his company owns a 4,000-bed hospital chain in the west coast.  For his hospitals, similar to others, elective surgeries subsidize everything else, and the number of elective surgeries has decreased drastically as a result of covid-19.  However, the government stepped in effectively to help hospitals get through their cash flow crisis by prepaying for Medicaid / Medicare claims, paying grants, and through other subsidies.  Sam is impressed by how the government has acted so far as it relates to hospitals.

For his energy businesses, their companies are obviously not drilling anything new right now.  There is no capital available for expansion.  Regarding M&A activity in the energy industry, Sam believes that the industry as a whole is still in the early stages of price discovery.  We should have a better understand of the extent of the damage to the energy industry by the end of 2020.  For natural gas specifically, we have had two soft winters in a row, so demand has been down.  Supply is also abundant, which makes the natural gas industry a difficult place to invest right now.

His logistics businesses are actually doing better than last year, much to his surprise.  Sam finds this very encouraging and believes that logistics is an industry that could expand rapidly, due to increased demand and the changing ways that we do business.

Sam then spoke more specifically about his real estate businesses.  Regarding EQR, he has been encouraged by the results.  His big fear was that rent collections would be way down.  But, EQR is basically collecting 98-99% of rents compared to a year ago, even for the difficult March to July 2020 period.  They are also 95% occupied.  Sam attributes this strong performance to EQR being positioned at the higher end of the multi-family market.  Their tenants, on average, spend only about 20% of their income on rent.  Of all the real estate asset classes, Sam believes that multi-family is the least likely to be impacted by covid-19.  However, he acknowledges that rental rates are down 1-2%, depending on geography, and that their ground floor retail tenants, particularly in NYC, has been hit hard.  The small businesses in their ground floor retail locations include nail shops, dry cleaners, small restaurants, etc., all of which are suffering.  As a result, they are only collecting 45% of these ground-floor retail rents and are offering rent deferrals to try and help these businesses stay afloat.  

More specifically about retail properties, Sam believes that for the wrong retail location, you can’t do anything to make it work.  Even free rent is too expensive if there is no customer traffic.  Retail is even more impaired today than conventional wisdom would suggest.  People are being forced to shop online, which is not going to help retail real estate.  When there are a multiple of “best” locations available, there is an impact on price.  He doesn’t think someone could offer him a retail deal that would be cheap enough to do right now and believes that the U.S. has been over-retailed for a while.  

Regarding hotels, a recent NY Times article stated that 25% of the hotels in NYC will never reopen their doors.  The question Sam asks is: what will they be converted into?  The largest hotels will slowly get back into business, but the cost of reopening is going to be immense.  You will start to see these hotels come on the market (for sale), because the costs of reopening will be prohibitive.

Regarding commercial office properties, some people say that the office business tomorrow will be very different than it is today, but Sam is not a believer in this.  He does not believe that you can run a business by “motivating on modem”.  You cannot build trust and understanding with people through Zoom.  If you want to move from NYC to Iowa, what do you do at 5pm?  However, he does think that the office market in this country is over supplied.  Regarding shared offices, Sam said that every iteration of this business model has always gone broke.  They are the marginal supplier and the marginal supplier gets eliminated first.  He does not think there will be a dramatic change overall in the office market.  We will not see the re-creation of major suburban office complexes as a result of covid-19.  

Regarding warehouse demand, Sam believes that the warehouse asset-class is the flavor of the month.  A warehouse is generally one big box and one big lease.  It is relatively easy to add supply.  Given time, developers will overbuild warehouses.  There is not much intrinsic value in the warehouse portfolios.  

Regarding publicly traded REIT Stocks, Sam’s opinion is that the stocks were low enough to buy in March/April, but not anymore.  There may be another buying opportunity like that in the future; he doesn’t know.  But generally speaking, he does not think the discounts today in the public market are sufficient to make them a “screaming buy”.  There are lots of REITs today that will be great long-term investments.  But, the bottom-fishing opportunities that Sam is looking for is about more than buying REITs at 20% off.  

Regarding political risk and potential rent control regulations, Sam believes that in spite of these risks, there is nowhere else more attractive in the world to invest than in the US.  In uncertain times, you want to invest in places with a strong rule of law.  And the rule of law is stronger in the US than almost anywhere else in the world.  Regarding rent control specifically, it sounds terrific…until you got it.  Everyone is finally coming to the conclusion that rent control is not the answer.  Yes, Sam acknowledges that there is higher political risk in the U.S. today, but he does not think we will see the same destructive rent control regulations that we have had in the past.

Regarding investment opportunities generally, Sam does not buy sectors; he buys deals.  Give him the right price and he will buy into any asset class.  But right now, there aren’t any transactions and there isn’t any price discovery.  The spread between what the seller thinks the property is worth and what the buyer will pay has been tremendous because there haven’t been any transactions. The banks are pulling back on loans, which is depressing transaction volume.  We will see a lot of construction projects around the country stop as lenders continue pulling back.  In NYC, there are high-end residential units that have been sitting empty for a long time.  Banks are likely to force these high-end units into the market and to force price discovery.  Right now, everybody is in a wait and see phase.  But this is not a repeat of the 1991-1992 crash or the 2008-2009 crash.  We will see price discovery occur later this year.  By the end of this year, we will see transactions occur, we will see the repricing of the commercial real estate market, and we will see opportunity.  

Written By: Ben Ho ‘20

Yang Gang Shares His Real Estate Experience in China

Yang Gang ‘21

Before CBS, I was an investment director at China's largest developer named Vanke. I came to CBS to further develop my real estate career in a global context, and thus joined REA as soon as I could. I was very honored that REA asked me to share my real estate experience in China, and gave me a valuable opportunity to contribute to our community.

China is one of the world's biggest real estate market with more than $2 trillion sales of newly developed properties every year. When you filter “real estate” in Global Fortune 500 list, all five of the companies are from China. To help my REA classmates better understand and leverage this growth, I introduced the history, drivers, business logic, trend, and my prediction of China's real estate market.

Thanks to REA's thoughtful organizing, I have made friends with lots of classmates who are interested in China's real estate industry, and the preparation of the sharing itself also helped me reflect my learnings from the past. I believe the International Matters is a great event of REA, not only because it gave classmates from different countries a chance to connect with other people, but also because it could act as a supplement of our Global Real Estate Investment class. I hope REA could host more events as such.

Written By: Yang Gang ‘21

Virtual Coffee Chat with James Schmid 05’, Chief Investment Officer & Managing Partner of Anchor Health Properties

James Schmid 05’, chief investment officer & managing partner of anchor health properties

Virtual Coffee Chat Summary: James Schmid

On June 10, 2020, the Paul Milstein Center for Real Estate and the CBS Real Estate Association kicked off the first virtual alumni coffee chat of the summer. James Schmid ‘05, who is the Chief Investment Officer and Managing Partner of Anchor Health Properties, took some time in the morning to discuss Anchor Health Properties, talk about his career, and answer questions from current and recent CBS students.

Anchor Health Properties was founded in 1985 and has been focused exclusively on the acquisition, development, and management of medical facilities. The company has closed on $1.3B in acquisitions, developed over 3.0MSF, and managed 5.3MSF.

James is responsible for Anchor’s acquisition efforts, capital markets activities, investor relations, and sourcing of new development and property management opportunities. Prior to joining Anchor, James held significant roles at CNL Financial Group, HCP, and UBS.

Highlights:

James came to business school as a career switcher. He did his summer internship in commercial lending and realized he wanted to join the principal investing side. He started at UBS as a generalist in real estate.

On why he decided to focus on medical office buildings: James liked the demographics and where the growth appeared to be going – the need for healthcare services. Understanding the net operating businesses intrigued him as well.

Anchor had collections of 95% in the month of May and just under 90% in April.

Medical office buildings have high renewal rates (~85-90%).

The healthcare real estate industry is quite fragmented. It is a very relationship-driven sector. A lot of your competitors are your friends.

Culture is very important to James and Ben (Managing Partner). They have set up an employee ownership model within their business. The infrastructure of the company is very important.

James doesn’t see telehealth overtaking the physical interaction of healthcare; however, Anchor has been building telehealth systems within their properties as they believe it will play a role going forward.

Parking is an operational issue for all properties. Sometimes parking is the biggest issue with a potential investment. Anchor has been working on making their properties rideshare friendly.

Life science is a very tenant-centric sector. They require high TI costs.

Anchor raised its first fund ($50M) in 2016. Will probably do a second fund of $100M to $150M. In 5 years, would like to have a discretionary fund. James believes there is such a thing as over-raising funds.

Never thought of himself as an entrepreneur, but really enjoys it. Loves the creative license and being his own boss.

“Work hard to make a name for yourself and get trained in an organization that trains a lot, and be creative. Don’t be afraid to take an entrepreneurship opportunity if it presents itself.”

— James Schmid

Written By: Andrew Kim ‘21