On November 10 and 11, 51 real estate undergraduate students participated in the first-ever Harrison Street and Real Estate Private Equity Club Case Competition. Students were tasked with valuing a local Madison student housing development using only information provided in the case materials. The Real Estate Private Equity Club assigned students to 13 teams of four based on grade level, classes completed, and experience. The teams then acted as Fifth Quarter Capital, a private equity company looking to buy out the existing equity partner in a development project with Alvarez Partners. They had twelve days to build an underwriting model, presentation, and executive summary for a team of judges comprised of Harrison Street employees, UW Faculty, and alumni.
Creating the Model
The subject property of the case was an amenity-rich new development that was 100% preleased at below-market rents. Students modeled acquisition prices, market rents, and expense growth to calculate their LP returns.
Monika Multhauf, a Junior studying real estate and finance, participated in the case competition. Her team used adjustment grids to calculate market rents from comparable properties provided in the case. They also used an adjustment grid to calculate a purchase price on a per-bed basis using the sale prices of comparable properties. After modeling a slightly below-target IRR, her team debated whether they should invest in the deal. They also looked at the property location and the UW-Madison student housing market in making their investment decision to invest, focusing on starting a relationship with the GP, Alvarez Partners.
Noah Heller, a Senior studying real estate and marketing, also participated in the case competition. His group took a slightly different approach — they considered the investor demand for the subject property and underwrote a higher purchase price. They included this conservative assumption yet were still able to achieve the low range of the target IRR. At the end, his team suggested that Fifth Quarter Capital invest in the deal as they believed their underwriting was conservative and their returns could likely exceed the returns in the model they submitted.
The first round of presentations was on Thursday, November 9th. Students were asked to give a 15-minute presentation, followed by ten minutes of questions from the judges. Noah’s team tried to “tell the story” of the investment by including a timeline in their presentation and walking the judges through their investment strategy.
Erik Tellefson, one of the judges, was amazed by the all of the students’ presentation skills and responses to difficult questions posed by the judges. The judges then scored groups’ Excel model, executive summary, presentation slide deck, and presentation skills to determine who would make it to the Friday presentations. On Thursday night, Harrison Street hosted a reception for all competitors and announced the four finalists. Both Monika and Noah were among the finalist teams.
On Friday, finalist teams were able to use some feedback from the reception to update their presentations and patch some of the holes discovered in the judges’ questions. Monika’s team focused on value-add aspects and the idea of a property management team as an amenity. Then it was time for the final presentation.
The pressures were high as other competitors and team mentors watched, but the finalists all had exceptionally strong presentations. Guest judge Erik Tellefson remarked that the “only real opportunity for development is understanding the interplay between the LP and GP [while not just] looking at things in a vacuum [to] understand real-world implications.” The finalist teams all looked at investing in the project as part of a bigger picture, specifically creating a relationship with a high-quality developer. After tough deliberation, the judges announced the top teams.
Congratulations to all the finalists of the case competition:
First Place ($3,000): Evan Walczyk, Brenna Paul, Alex Lortscher, Thomas Dupont
Second Place ($2,000): Keegan Crapitto, Monika Multhauf, Anna Zimmerman, John Shea
Third Place ($1,000): Aidan Witte, Aidan McCarthy, Finley Wistom, Noah Heller
Fourth Place: Kevin John, PJ Sitzer, Avery Berry, Penny Berens
Participating in the case competition was a great learning experience for all students involved. The case competition was a way to build collaborative skills and apply skills learned in the classroom. Noah shared, “I really enjoyed working with students from various grades throughout this competition. My group bonded throughout the week, and we genuinely enjoyed working with each other. We credit our success as a team partially to our ability to work together as a group. I am thankful I had this experience to work with fellow real estate students and look forward to continuing the relationships I formed.”
When asked about her experience, Monika shared, “It was great working with students with different skill sets. While the model was a large part of the project, the team’s success also relied on market research, formatting the presentation, and presentation skills, which allowed each member of the team to really show their strengths.”
Thank you to all who were involved with the inaugural Real Estate Private Equity Club and Harrison Street case competition. Special thank to Harrison Street who generously donated $12,000 so this case competition could become a reality. The Real Estate Private Equity Club and everyone involved with planning the competition did a great job creating the case materials and organizing the events.
Thank You to the Judges!
Tim Carr, Department of Real Estate, Wisconsin School of Business
Sean Casey, Harrison Street
Steve Disse, Colliers
Mark Eppli, Graaskamp Center, Wisconsin School of Business
Reece Kamins, Wintrust
Brian Mutchler, Harrison Street
Gregory Reed, Graaskamp Center, Wisconsin School of Business
Erik Tellefson, Capital One