What is Real Estate Lab?
A team based course where MBA students from the Kellogg School work on a quarter long consulting project for a Sponsor Organization under the guidance of a faculty instructor.
What are the benefits of Real Estate Lab for Sponsors? Students?
The talent, resources, and 500-1,000 hours of MBA level research and analysis are applied to assisting a Sponsor Organization on a strategic issue. The students are able to apply their academic training to real world issues and enhance their marketability. The students are supervised by a faculty member.
What are examples of past projects?
Past projects include investment thesis origination, private equity manager selection and measurement, market and asset selection, portfolio operational improvements, green development, marketing strategies for differentiation, development, business plan creation, and fundraising.
Sounds great, what are the requirements to become a Sponsor Organization?
The Sponsor Organization must have a timely, relevant and novel project topic with the analytical rigor to merit a course credit. The Sponsor must commit availability to the project team to answer questions, provide direction, and evaluate the final work product. A small honorarium is required.
How does a Sponsor Organization get involved?
A preliminary discussion should be held with the faculty instructor to identify if the issue is a good fit for a Lab course. William Bennett (firstname.lastname@example.org) can be reached at 512.773.9374 for inquiry; brainstorming dialog is welcome.
Real Estate Lab Project Example
An institutional size endowment sponsored a Real Estate Lab in which the students created a process to analyze a Private Equity Fund Manager’s performance on a risk-adjusted basis.
The student team analyzed the Fund Managers realized investments and decomposed the returns into their component parts. By performing this IRR attribution, the student team was able to isolate the manager’s base return (unlevered yield), skill (NOI creation), speculative return components (cap rate compression), and assess the impact of leverage on returns. Then the team time synchronized & compared the returns by asset type (i.e. Industrial, Retail, Office) to an unlevered benchmark (NCREIF), adjusted for leverage, and calculated the Manager’s over/underperformance on a risk-adjusted basis.
The Fund Manager’s gross returns (17%), while impressive at face value, underperformed the index on a leverage (83%) and time (Boom) benchmarked basis. The team recommended that the endowment utilize the process created to assess new potential Managers and prior to reinvesting with existing Managers.