Building on the success from last year’s study for Atlantic Realty Partners, Kellogg students worked with another local developer—Winthrop Properties— on a feasibility study for Elmwood Avenue, a 20-story condominium project in downtown Evanston. Elmwood Avenue will consist of approximately 161 luxury condominium units, 6,000 square feet of retail space, and five stories of parking. Construction is projected to begin in 2006. Kellogg students competed in the second annual National Real Estate Finance Challenge at UT Austin’s McCombs School of Business on October 31. The Challenge, which is the country’s largest graduate real estate finance challenge, is a case based competition between 12 leading business schools. The Kellogg team included John Collura ’04, Jonathan Glick ’04, Jeff Judy ’04, Laurent Luccioni ’04, Bruno Roti ’04, and Chris Winnen ’04. Goldman Sachs provided the case, which required students to play the role of a global real estate opportunity fund. Teams had to choose from three alternatives for an 877,000 square foot distressed retail property that suffered from contaminated soil, high vacancy, and significant competition. Considerations included fund yield requirements, disposition strategies, liquidity concerns, environmental liability, and partnership structures.
Students Geoff Carroll ’05, Ben Chittick ’05, Rich Copans ’05, Ben Herrig ’05, Seth Lasser ’05, and Daniel Ntim-Addae ’05 assisted Winthrop with forecasting the project’s impact on tax revenues, preparing a detailed market and financial feasibility analysis, estimating price points and absorption rates, and determining amenities. Their work will help Winthrop secure necessary approvals, finalize architectural designs, and obtain construction financing. The team presented its analysis to Winthrop President Robert Horner (’71 BBA) and his team on May 26.
Starting an Important New Tradition The Real Estate Program and Real Estate Club hope to establish an annual tradition of pursuing similar independent study projects. “The Winthrop project showed how MBA skills can be applied to real estate,” said Carroll. “We pulled together marketing communications, positioning, pricing, financial modeling, economic impacts, and presentation skills to make the project successful.” Ntim-Addae added, “I have an architectural background, but I wanted to understand how marketing and finance apply to real estate. This project helped me achieve that goal.” These partnerships have drawn praise from local developers. Horner, a Guthrie Center Advisor, stated, “I have always been impressed by the quality of work Kellogg students perform, and after seeing their analysis for Atlantic Realty Partners, I decided to seek a similar analysis for my project.” Richard Aaronson, President of Atlantic Realty Partners, was also very pleased. He added, “Kellogg’s real time qualitative survey of the amenities preferred by students and their statistical analysis of the Evanston market were unique and extremely valuable in helping us refine our services and marketing plan.” Construction on The Reserve at Evanston was completed in April 2004.