HBS Real Estate Club Team Wins First Ever National Real Estate Challenge

HBS captured first place in the 2005 National Real Estate Challenge case competition hosted last week (November 10-11) by the McCombs School at the University of Texas in Austin.

Real Estate Club members Cliff Chandler (OF), Zack Georgeson (OG), Nelson Hioe (OG), Kevin Kaberna (OG), Arnaud Karsenti (OA) and Nadeem Meghji (OB) formed the winning team that bested UC Berkley, Wharton (last year’s defending champion), USC and Stanford Graduate School of Business to take the National Championship. HBS has now placed a team in the final three for the fourth straight year-an unprecedented feat.

The HBS team competed against 15 other teams from Wharton, Stanford, Berkley, Michigan, Columbia, NYU, Kellogg, Chicago, UCLA, USC, UVA-Darden, UNC, Duke, Cornell and UT-McCombs in front of an esteemed panel of judges from Goldman Sachs, Cresent Real Estate Equities, Wood Partners, Banc of America Securities, Prudential Mortgage Capital Co., J.P Morgan, Jones Lang LaSalle and many others.

The competition required each team to prepare a 20-minute presentation that involved an evaluation of an investment opportunity in a commercial property, based on an investment that had recently been consummated by Goldman Sach’s Whitehall Real Estate Opportunity Fund. Students were asked to address issues concerning the risks and rewards of the investment (from the perspective of the fund and the developer), the partnership structure, the development process, the selling strategy and options for operating partnerships with other entities.

The case was distributed on Tuesday morning and the HBS team (under the disguised name “13th Floor Investments” for un-biased judging reasons) had only 48 hours in which to analyze the case, come to a decision concerning all the investment issues and options, create a 20-minute presentation and travel to Austin to turn in the final presentation by 7:00 p.m. Thursday night. The first round of competition took place on Friday morning before the panel of judges (including Goldman Sachs Whitehall Fund representatives who had worked on the actual deal).

This seemingly impossible task was accomplished by two all-night meetings in Spangler’s project study rooms (as HBS class attendance rules further handicapped the team in that they had to attend all classes during the two days). Nonetheless, the team took advantage of a slip in security procedures and continued the Wednesday-night meeting until the early hours of the morning. Fueled by the notorious Spangler low-fat yogurt self-serves, severely over-priced M&M’s and a burning desire to amend last year’s second-place finish and to “Beat Wharton,” the team developed an analysis that was both creative and quantitatively sound. The team then worked feverishly on the PowerPoint presentation during the plane flight to Texas Thursday morning, where one team member was reprimanded and informed that if he did not remain seated in his assigned seat he would be “forced to serve drinks and peanuts to the other passengers if he wanted to remain on the flight.” Overly aggressive flight attendants aside, the team managed to parlay a mass of creative quantitative analysis and ideas into a coherent message and investment stance.

That evening the team dined with their fellow competitors and the judges at the Bob Bullock Texas State History Museum. During dinner the team was barred from mentioning its school’s name to avoid biasing the judges. After a spicy Texan dinner that did little to help settle nerves, the team spent another late night practicing its presentation and then attempted to catch a couple of hours of sleep prior to the 6:00 a.m. wake-up call.

Despite a serious lack of sleep, the team of six managed to present a polished and professional presentation in the first round of competition, aided in part by the lucky drawing of the last presentation slot, which provided the team an extra 90 minutes of much-needed presentation practice. During the Q&A portion of the first round presentation, the team skillfully responded to the judge’s tough questions and provided additional support for the team’s decisions.

After a brief lunch at the McCombs School of Business, the final four teams were announced. The HBS team had won its bracket, beating three other top schools and successfully advancing to the finals where the four finalist teams from each preliminary track (Wharton, Harvard, UC Berkley and USC) advanced to a final presentation and head-to-head “show-down” for overall 1st, 2nd, 3rd and 4th place.

The HBS team conducted its final-round presentation before more than 20 expert judges and 80 fellow competitors. Nelson Hioe opened with a summary of the team’s overall recommendations, along with a development-selling strategy analysis; Cliff Chandler provided detailed analysis of the site location, market conditions and project vision; Kevin Kaberna discussed the numerous risks and rewards of alternate operating partnerships for the developer; Arnaud Karsenti and Nadeem Meghji provided in-depth analysis of the term-sheet from both the fund and developer’s perspective; and finally Zack Georgeson presented the quantitative analysis that reinforced the team’s recommendations and summarized the presentation.

Subsequently, the HBS team fielded a tense five minutes of comprehensive questions from the expert judges, whereupon the team once again proved that its rationale, recommendations and analysis were watertight. HBS appeared to have blown away the field, but the competition had been fierce and it was now up to the judges to decide.

Following a nerve-racking awards ceremony and a presentation by Goldman Sachs of “The Real Deal,” the expert judges noted that the HBS analysis had touched on almost every critical aspect of the case and was by far the most polished of the presentations. HBS had won!

The HBS team was awarded first-place trophies amid boisterous applause; the UC Berkley team came in a distant second; third place went to Wharton; fourth to USC; and the Stanford GSB team received an honorable mention. The victorious HBS team (following tradition of prior HBS teams) readily accepted the $5,000 prize money and immediately made reservations at a steak-house in Austin for a celebratory dinner. It is rumored that the team members enjoyed their dinner and the Friday evening festivities in the city of Austin; however, this has yet to be confirmed as several of the team members have yet to return to Boston from 6th Street.

November 21, 2005
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