Commercial Real Estate Development

Designed to analyze the real estate development process primarily from the perspective of the equity participant, the Commercial Real Estate Development course concentrates on the identification and evaluation of critical assumptions related to the financial feasibility, construction, and financing of economically viable commercial real estate developments. Inherent risk factors, and ways to manage risk, are also explored.

All phases of the development process are examined: idea conception, marketability, financial feasibility, contract negotiations, and debt and equity financing. During this intensive three‐day course, prominent practitioners and real estate attorneys will join the lectures and review, in detail, two common contracts utilized in the development process—a Joint Venture (LLC) Agreement and a Construction Loan Agreement.

Computer Requirements:

Laptops or tablets are required as course materials will be distributed electronically.

Earn a Professional Certificate in Real Estate Finance and Development
This course is part of the Real Estate Finance and Development certificate program, offered jointly by MIT Professional Education and the MIT Center for Real Estate. 

Learn more about how you can earn a Professional Certificate when you take this and other real estate courses.

Lead Instructor(s): 

Chris Gordon
W. Tod McGrath

Dates: 

Jun 19, 2017 - Jun 21, 2017

Course Length: 

3 Days

Course Fee: 

$3,900

CEUs: 

1.9

Status: 

  • Open

It is highly recommended that you apply for a course at least 6-8 weeks before the start date to guarantee there will be space available. After that date you may be placed on a waitlist. Courses with low enrollment may be cancelled up to 4 weeks before start date if sufficient enrollments are not met. If you are able to access the online application form, then registration for that particular course is still open.

This course has limited enrollment. Apply early to guarantee your spot.

Participant Takeaways: 

Participants will be able to:

  • Identify the components of the real estate development process from the perspective of the investor
  • Evaluate the critical elements of a real estate development in deciding to go forward or not
  • Identify risk factors and ways to manage and price risk
  • Analyze the financial feasibility of a real estate project
  • Through team exercises, attendees will leave with a solid understanding of – and be more confident in negotiating, the terms of a Joint Venture (LLC) Agreement and a Construction Loan Agreement

Who Should Attend: 

This course is applicable to a wide range of professionals across the real estate, banking, finance/investment, and insurance industries. Specifically, the course may be of interest to fund managers, investment portfolio managers, financial advisors, investment bankers, fixed-income analysts, financial risk managers, global financial market specialists, and professionals working in macroeconomic policy. More generally, this class can be valuable to anyone dealing with global financial markets and real estate investments.

Program Outline: 

DAY ONE

8:00 am – 9:00 am: Registration, breakfast

9:00 am – 10:30 am: Overview of the mixed‐use development opportunity. Discuss the overarching business objectives of the land seller, developer and municipality when negotiating a right of entry agreement (to conduct environmental testing), a purchase & sale agreement, and a development agreement (physical and financial mitigation for enhanced development rights).

10:30 am – 10:45 am: Break

10:45am – noon: Review development program, budget, and income statement. Discuss simple financial feasibility analysis framework (office/retail) and economically rigorous market analysis (condos).

Noon – 1:00 pm: Lunch

1:00 pm – 2:30 pm: Refine our financial focus. Calculate static and dynamic measures of investment return at the venture (project) level: Profit Margin, Free‐and‐Clear return, Cash‐on‐Cash return, Internal Rate of Return (IRR), and Net Present Value. Review the history of stabilized real estate investment returns as a guide to pricing development phase capital.

2:30 pm – 2:45 pm: Break

2:45 pm – 4:30 pm: Further refine our financial focus by discussing how development is a process that strategically identifies and resolves business and financial risks. Review the Hodder & Riggs approach to evaluating risky projects, and apply that approach to our fact set.

DAY TWO

8:00 am –  9:00 am: Breakfast

9:00 am – 10:30 am: Discuss over‐arching business objectives of the parties to a Joint Venture (LLC) Agreement.

10:30 am – 10:45 am: Break

10:45 am – noon: Upstream (intra‐venture) analysis: preferred returns, promoted interests, development fees, capital calls, and completion guarantees. Discuss capital markets‐based framework for determining “fair” profit splits.

Noon – 1:00 pm: Lunch

1:00 pm – 2:45 pm: Breakout session with counsel to discuss required changes to the form Joint Venture Agreement.

2:45 pm – 3:00 pm: Break

3:00 pm – 5:00 pm: Continued discussion with counsel followed by moderated negotiation of the form Joint Venture Agreement.

DAY THREE

8:30 am – 9:00 am: Breakfast

9:00 am – 10:00 am: Presentation on choosing an appropriate construction contracting method.

10:00 am – 10:15 am: Break

10:15 am – 11:30 am: Discuss over‐arching business objectives of the parties to a Guaranteed Maximum Price (GMP) Construction Contract and Construction Loan Agreement.

11:30 am – 1:00 pm: Lunch

1:00 pm – 2:45 pm: Breakout session with counsel to discuss required changes to the form Construction Loan Agreement

2:45 pm – 3:00 pm: Break

3:00 pm – 5:00 pm: Continued discussion with counsel followed by moderated negotiation of the form Construction Loan Agreement.

Course Schedule: 

This course meets 9:00 am – 4:30 pm on Monday and 9:00 am – 5:00 pm Tuesday and Wednesday.

Breakfast is provided before the start of class each morning, at 8:00 am on Monday and Tuesday and at 8:30 am on Wednesday.

Laptops or tablets are required as course materials will be distributed electronically.

Participants’ Comments: 

MICHAEL HEIDRICH, ANALYST, AEW CAPITAL MANAGEMENT

“Very interesting- great discussions- I highly recommend taking this course!”

PARTICIPANT, AEW CAPITAL MANAGEMENT

“The discussions and moderated negotiations will be extremely valuable and applicable to my day to day responsibilities and future career development.”

WILL YANDELL, HERITAGE LAND AND DEVELOPMENT

“This was a very enjoyable and informational course and hope to attend the finance courses in the future.”

JIM FITZGERALD

“This course was excellent and Tod is an incredible talent with commanding knowledge of Real Estate Development. You are not bored for one minute in three action packed days. The guest speakers are some of the best minds in the industry.”

OLIVER RIFKIND

“Everything I wanted from the course and more. A must do to understand contracts and real use scenarios.”

DARREN LOWE

“This was another amazing course from Tod. The hands on negotiations were a wonderful teaching tool.”

MARK WIESENDANGER

“I was curious to see what MIT professional educational courses would be like. I was not surprised that they were comprehensive and well researched.  However, I was surprised to have received so much information in such a little time. It never seemed overwhelming and actually, was rather fun. Tod and the visiting attorneys assisting him were very friendly, knowledgeable, and professional. This real world experience added an important level of depth to the classroom experience. I am now considering applying to the MSRED program. THANK YOU!”

Instructors: 

Location: 

This course takes place on the MIT campus in Cambridge, Massachusetts. We can also offer this course for groups of employees at your location. Please complete the Custom Programs request form  for further details.

Content: 

Fundamentals: Core concepts, understandings, and tools (40%) 40
Latest Developments: Recent advances and future trends (10%) 10
Industry Applications: Linking theory and real-world (50%) 50

Delivery Methods: 

 

Lecture: Delivery of material in a lecture format (40%) 40

Discussion or Groupwork: Participatory learning (60%)

60

Levels: 

Introductory: Appropriate for a general audience (65%) 65
Specialized: Assumes experience in practice area or field (35%) 35