CRER Vol. 11 (2013)

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    Hollywoodland: Investing in an Emerging Tech, Digital Media, and Entertainment Industry Market
    Bridges, Robert; Ammar, Henry (2013-07-01)
    This case focuses on an emerging tech, digital media, and entertainment industry market with a stringent entitlement environment, and the opportunity for a developer to create an innovative project that capitalizes on emerging trends. The case asks students to propose a development strategy for a featured site taking into account a wide range of variables and potential uses. The developer, The Oceanic Fund (TOF), has been invited to submit a purchase proposal for a compelling property that had recently come onto the market. In their proposal, TOF must elect to either purchase the asset outright or, alternatively, form a 50/50 joint venture with the seller – Mays McCovey – a creditor that has recently taken title to the asset pursuant to a foreclosure on the previous developer/owner. The case’s protagonist is Ben Taylor, a young Development Manager who has been tasked with devising a strategy for the projec, and preparing a proposal to TOF’s principals. Students must assess the project through Ben’s eyes and devise a strategy that accomplishes a suitable use(s) for the site that is feasible within the entitlement and financing environment, satisfies TOF’s return requirements, and intelligently capitalizes on the opportunities borne out of an emerging market. The proposed project gives students exposure to niche product types such as sound stages, recording studios, and creative office, in addition to more conventional asset types such as retail, residential, and hospitality. The case encourages forward thinking and the importance of understanding business trends and business culture, especially those of tech, digital media, and entertainment real estate, which are drastically different from traditional office space.
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    2013 Industry Leader Profile: Gerald D. Hines
    Hines, Gerald D. (2013-07-01)
    [Excerpt] Gerald D. Hines founded his namesake firm in Houston in 1957. Since then, the company has steadily grown into a global leader in real estate investment, development and management, and is one of the largest real estate organizations in the world, with offices in 104 cities in 18 countries, and controlled assets valued at approximately $23.8 billion. The firm has developed, acquired and managed properties totaling more than 488 million square feet of office, residential, mixed-use, industrial, hotel, medical and sports facilities, as well as large, master-planned communities and land developments.
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    Rolling Valley: Discovering Highest and Best Use
    Michetti, Matthew; Oliver, Pike (2013-07-01)
    This case introduces students to many of the real estate issues faced when evaluating a real estate development opportunity with an emphasis on market assessment and financial feasibility. Over a two-week period, Brian Langston, a Development Associate and new hire at California-based land developer CALD, is tasked with making a recommendation regarding a 150-acre suburban parcel in Rolling Valley, California, called Village Green. The decision boils down to whether an entirely single-family community or a mixeduse community provides a greater residual land value for the project. Brian must make a recommendation to CALD’s partners in a way that recognizes and balances qualitative forces with quantitative metrics, and represents a viable project in either case.
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    Miscellaneous Frontmatter
    Editorial Board, Cornell Real Estate Review (2013-07-01)
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    Letter from the Editors
    Coulson, Jessica; Legge, Matthew; Patch, Jason (2013-07-01)
    [Excerpt] Dear Readers, We are excited to present the 11th Volume of the Cornell Real Estate Review (CRER), a student edited and managed publication with oversight from faculty in the Cornell Baker Program in Real Estate. As editors, we recognize the importance of joining scholarly discourse and professional expertise to gain a thorough understanding of real estate issues and opportunities. The CRER strives to promote the practical and efficient application of real estate theory, and we hope that our audience finds this special edition both engaging and useful.
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    Table of Contents
    Editorial Board, Cornell Real Estate Review (2013-07-01)
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    Funk, David L. (2013-07-01)
    [Excerpt] Welcome to this SPECIAL EDITION devoted to the Cornell real estate case study series. Real estate case studies have been a component of the Cornell Real Estate Review since 2003, but this SPECIAL EDITION marks the culmination of real estate case studies at Cornell into an established series aimed at providing practice-oriented studies and resources to academics, practitioners, and companies.
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    Convene: Pioneers in a Corporate Real Estate Revolution: Convene Takes Manhattan
    Rigaud, Pierre; Legge, Matthew; Fleming, Susan (2013-07-01)
    This case focuses on two young entrepreneurs who have created a company with an innovative business model that caters to an underserved segment of the local meetings industry. They have managed to establish a successful foothold in New York City, with three thriving facilities and rapidly growing brand recognition. However, the company’s co-founders have begun to think about expansion and whether their business model can be adapted for markets outside of Manhattan. The case gives a detailed overview of Convene’s business model and the nature of its facilities. It then presents an investment opportunity in Boston, and asks students to consider whether the proposed project is suitable as Convene’s first foray into a new market. Students are able to consider the opportunity from a market perspective as well as from an operational and financial perspective by analyzing the project based on the variables provided in the case. The case is intended to provide students with an understanding of deal dynamics from the perspective of both parties to the proposed transaction so that they can appreciate the interests that often influence deal structuring and how the different parties can appeal to those interests, while satisfying their own.
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    Orange Vista: A Development Manager Plays Quarterback
    Kuhlman, Daniel; Oliver, Pike (2013-07-01)
    This case tells the story of a newly founded development management company, Palisades Real Estate (PRE), which takes over a challenging residential development project on behalf of its owner. The project is plagued by several onerous developer obligations and outstanding entitlements that have complicated the owner’s exit ambitions, which has led the owner to seek the expertise of a highly talented development management firm that can guide the project to a successful conclusion. After agreeing to a risky compensation structure that defers much of its compensation to the sale of the project, PRE undertakes a complex assortment of restructuring efforts in order to make the project feasible, including the renegotiation of a development agreement, the pursuit of difficult permits, and arrangements for phasing and bond financing. Led by one of its principals, Hal Orin, PRE demonstrates what development managers can do when they’re at the top of their game, and the value that they can add to even the most seemingly doomed projects. The case provides an opportunity for students to learn about what development managers do, how they add value, and how they are compensated.
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    Jian Ye Li: Assessing and Managing Risks in International Real Estate Development
    Schaefer, David; Hyat, Syed (2013-07-01)
    This case focuses on a USD $108.6 million mixed-use development project in Shanghai, China from the perspective of a U.S.-based private equity firm. The firm has been presented with an opportunity to coinvest in the project alongside a state-owned Chinese development entity and an international development firm active in the Asia- Pacific region. The case is centered around risk identification and analysis and provides students with an opportunity to explore all of the major risks that are encountered by developers and investors in both domestic and international real estate development projects. The protagonist of the case is Guy Fulton, a young real estate professional who has been tasked with weighing the various risks against the return projections for the project and who must devise a strategy with regard to proposed joint venture arrangements with the other project participants. In doing so, Guy must navigate a complex assortment of development issues and determine how his firm can proceed with the project while still satisfying the investment objectives and risk tolerances of the fund and its limited partners.