Case Detail

Case Summary

Back to School: Real Estate Development of Off-Campus Student Housing

Case Number: 5-313-511, Year Published: 2014, Revision Date: April 14, 2016

HBS Number: KEL854

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Authors: Craig Furfine

Key Concepts

Cash flow analysis, Financial analysis, Real estate, Real estate development, Student housing

Abstract

Christopher Lenard and his longtime friend, Kimberly Slater, are exploring the idea of developing a student-housing complex near the University of Wisconsin, Madison, by replicating Slater’s highly successful, similar development near the University of Florida. Madison seemed to present attractive market and demographic conditions for investment in student housing in the summer of 2012. But before committing a large share of his personal wealth to the project, Lenard needs to conduct a more careful analysis of its potential risks and returns. By putting themselves into the shoes of a budding real estate entrepreneur, students will evaluate both the merits and pitfalls of various approaches to the financial analysis of real estate development projects.

Learning Objectives

After reading and analyzing the case, students will be able to:

  • Evaluate the fundamental economic determinants driving the potential gains to real estate development
  • Explain the merits and deficiencies of tools that can be applied to the financial analysis of real estate development projects, including financial feasibility; developing to a yield on cost; net present value analysis; and real options.

Number of Pages: 18

Extended Case Information

Teaching Areas: Finance

Teaching Note Available: Yes

Geographic: Madison, Wisconsin, United States

Industry: Real estate development

Organization Name: Fictional

Organization Size: Small

Decision Maker Gender: Male

Year of Case: 2012