/ Real Estate Development Course
3 Day Training Course  June 19-21, 2013

COURSE PREPARATION

Welcome to the REALpac Commercial Real Estate Development course. We will cover a large amount of material over threedays, so in order to ensure each participant gets the most out of the course, we suggested that participants prepare in advance of the session by following the guidance offered below.

The course willmake use of the ‘Case Method’ for four of the modules slated to be covered. Participants who are not familiar with the case method need not worry, the readings outlined below will introduce the process and time will be spenton the first day of the coursediscussing the basics of the case method. In addition, we will provide time for you to meet in small groups during the course in order to discuss the cases.

Each case will likely take most participants 2-4 hours to prepare – we suggest you work on the cases sequentially, one at a time. The questions provided below for the cases are not necessarily meant to be answered, rather they are proposed as a framework from which you can think about and evaluate each case. Please bring along your laptop and / orMS-Excel spreadsheet (on a USB key) to discuss and share your calculations, analysis and recommendations with your classmates.

  1. NOTE - CASE METHOD(to be discussed June 19th)

Please read the Note on Case Analysis(from Ivey) prior to reading any of the cases. While preparing the cases, in addition to the questions assigned below, please feel free to use the providedMS-Excel case template in the preparation of your analysis and recommendations.

  1. NOTE - FINANCIAL ANALYSIS OF REAL PROPERTY INVESTMENTS(to be discussed June 19th)

Please read the note Financial Analysis of Real Property Investmentsand familiarise yourself with the “set up” and the various methods of valuation – we will be discussing them in class and you will use them to analyse the cases below.

  1. CASE 1 –503 CRICKET ROAD(to be discussed June 19th)

Learning Objectives:

  1. To discuss the residential development process and some of it's challenges.
  2. To discuss some basic real estate valuation methods and techniques.

Questions:

  1. Is Mason's proposed project feasible?
  2. How and why does Mason change his initial plan over time? How does the return compare to his investment as his set-up is revised over time?
  3. Which issues that Mason encountered were avoidable and which ones were out of his control?
  4. How does the proposed project fit with Mason's other personal and professional objectives?
  5. What alternatives does Mason have?
  1. NOTE ON COMMERCIAL REAL ESTATE FINANCIAL MARKET (to be discussed June 20th)

Please read this note prior to reading the next case as it will give you an understanding of the real estate financing market.

  1. CASE 2 –THE MILLEGAN CREEK APARTMENTS(to be discussed June 20th)

Learning Objectives:

  1. To expand your understanding of real estate development investment analysis and planning - the location, the market, the product, the regulatory environment, the players etc.
  2. To introduce you to the role of the banker and the real estate development financial system.
  3. To expand your understanding ofthe apartment market / product.
  4. To discuss larger scale development and developers in the multi-family sector.

Questions:

  1. Would you recommend that Fleetmake this loan on the terms negotiated?
  2. What do you think of the location, the product and the pricing? How does it stack up against the competition?
  3. Do you think there is sufficient demand for a project of this size?
  4. How much profit can the developer expect to receive from this project? What are the developer’sbiggest risks?
  1. CASE 3 –REGENCY PLAZA(to be discussed June 20th)

Learning Objectives:

  1. To discuss the project management role within real estate development and some of it's challenges including the interplay between design, marketing, sales, construction and financial return.
  2. To discuss some the challenges and benefits of mixed use development.
  3. To discuss hotel andcondominium development.

Questions:

  1. What has been the role of the project manager up to this point? Have the marketing and design processes been set up properly? What if anything would you have done differently?
  2. What should Hodgkins do about the Miller's requested changes? How should she implement her decision? What are the construction implications of her decisions, both now and at earlier stages?
  3. How would you lay out six to nine units on the floor plan on Exhibit 1? Prepare a design for your group to present in class – blank transparencies will be provided(you should have a similar level of detail to Exhibit 2).
  1. NOTE ON THE EVOLUTION OF RETAIL IN THE UNITED STATES

Please read this note prior to the Value Retail case.

  1. CASE 4 – VALUE RETAIL(to be discussed June 21st)

Learning Objectives:

  1. To expand your knowledge of development in the retail market, specifically the value segment.
  2. To give you some exposure to international real estate development / investment.
  3. To discuss different types of deal structures for partnerships.

Questions:

  1. Please complete Exhibit 7.
  2. What percent is total occupancy cost to the expected sales for the proposed project? Does the deal work?
  3. What is the breakeven occupancy after debt service? What kinds of returns is Scott estimating before and after the partnership splits?
  4. What are the major risks in this particular deal? What are the major risks typical to retail real estate?
  5. How would you structure the deal with your partners? If you were an investor, what would you want?