Six students from the Kellogg School of Management were named winners of the ninth annual Kellogg-Booth Real Estate Challenge.
The Real Estate Challenge is a quarter-long, for-credit course in which the teams took on the role of an institutional investor presenting at a simulated investment committee meeting. Each team created an investment analysis and acquisition recommendation on a portfolio consisting of industrial, apartment, retail, office and hotel assets located in the Chicago metro market. The course concluded with a final presentation and question-and-answer session with a panel of five industry judges, acting as the Pension Fund Board.
“The teams grappled with the complex calculation of post-fee, post-leverage risk-adjusted returns and thereby demonstrated that they understood how financial structuring changes the risk-return characteristics of a joint venture investment.” said Jacques Gordon, Global Strategist for LaSalle Investment Management.
The Kellogg team’s acquisition strategy focused on attempting to capture excess returns through investing in urbanization trends in Chicago’s downtown. Their investment thesis predicts a Gold Coast apartment market recovery and continued State Street retail expansion over the next five years, and was supported by an in-depth submarket survey, detailed asset level review, and capital structure analysis.
William M. Bennett, a faculty instructor of the Kellogg Team said, “The Challenge is a cutting-edge example of how universities and leading firms can work together to apply rigorous academic concepts to complex real-world issues.” Team co-instructor and Real Estate Program leader Denise Akason
added that, “Experiential learning is a pillar of our program, and a reason Kellogg is a leader in real estate education.”
When asked about the Kellogg Team’s performance, Bennett said, “The Kellogg team was able to gain the confidence of the judges, who acted as the pension fund’s investment board. As my colleague, Professor Paolo Sapienza
, has shown through her research and the Booth/Kellogg Financial Trust Index, confidence is of utmost importance when making investment decisions.”
First year Kellogg student and team member Justin Hollyn-Taub said, “The Kellogg/Booth Challenge is the quintessential experiential learning exercise - whether my team members end up on sitting on the board of pension fund, working in real estate private equity, or taking a more entrepreneurial approach within the industry, the skills and tools we were able to develop in completing this project will be very valuable.”
Kevin Newell, the team Project Manager said, “This was an incredible opportunity to synthesize and apply the material we’ve covered in nearly every course we’ve taken at Kellogg so far. The Challenge also prepared us to apply the material to real-world situations in the real estate industry.”
For its winning efforts, the Kellogg team was awarded 70% of the cash prize, while the team from Booth claimed 30%.