Day one of "Corporate Real Estate"

Dr. Margaret Latshaw, Started the class with introductions to JE Dunn (multi-billion dollar construction company) who shared their process of deciding where they were to put their corporate headquarters. Terry Dunn was accompanied by Greg Nook. They told the candid challenging story of their four year process step by step. They made some valuable observations about the real estate process.
Dr. Latshaw's personal experience working with Sprint, H&R Block and Bank of America has proven valuable in her design of this course. After JE Dunn's presentation, Margaret shared a academic discussion of corporate real estate based on our assigned readings, followed by a visit by Wayne Mathison who ran a 300 person corporate real estate department and is now a private consultant. We continued with a working lunch with Justin Chamberlain head of real estate from H & R Block and their retail portfolio. The challenges of opening up over 100 retail locations per month can be quite daunting. They outsource a large portion of their portfolio to Cassidy Turley and following Justin, we heard from Rich Etzkorn from Cassidy Turley who not only works with H&R Block but also is very involved with Edward Jones 12,000 locations around the country.
We'll close today with a review by me (Walt Clements) on some financial spreadsheets used to measure cost of occupancy that was introduced in our "on-line" sessions and then some presentation tips as the students prepare to make some presentations next month.
Holiday wishes to all.

First day of 'Capital Markets and Real Estate"

The “Capital Markets and Real Estate” course started yesterday under the instruction of Dr. Randy Anderson, the Director of the real estate program at the University of Central Florida. He comes with personal experience as a real estate investor as an individual and as a general partner in a private equity fund. His research in investment properties international and practical experience was evident as he shared his process for evaluating the four basic property types. Which property type should you be invested in and more importantly why? We learned which exogenous shocks to look for and how they impact our real estate investment decisions. We identified the major indicators to track and the free data websites from which to extract meaningful data and what it means. We discussed the possibilities of inflation, when interest rates were going to increase and more importantly. Most importantly he provides the factual data that makes Kansas City a prime location for institutional investment capital right now. He is an advisor to an investment firm who recently bought two large apartment complexes in Olathe, KS. Knowledge truly is Power!

Re = Rd + LR(Rp-Rd)

Another formula to measure leverage and corresponding risk associated with taking on more leverage. Practical insights were discussed concering what to consider when making forecasts of income and future sale price. Practical insights from experience.

That formula coupled with the simple Gordon Growth Model can provide some practical "back of the napkin" assessments when you consider real estate investing.

Dr. Anderson and Dr. Clark offered detailed explanations of how secondary markets work as well as the CMBS markets. How they work, and how we can use them.

Another information packed day.

November Update on Executive Masters Program

The third month of the Executive Master’s in Entrepreneurial Real Estate is now in session.  Yesterday we concluded the “Urban Planning”  course with a simulated case study and role play of the Polsinelli Building Proposal with members of the class playing the roles of,” Highwoods”,” Save our Plaza” folks, “Planning Commission” and “City Council”.  It was quite engaging and interesting.  This follows  personal presentations by Vickie Noteis who represented the “Save Our Plaza” group and Jan Marcusson, City Councilwoman. 

 In addition,  Forest City , Inc (one of our country’s largest developers)  sent, John Neely, one of their lead developers to spend the day with us to talk about how they consider the urban plan of a community and how they engage with the urban planners to decide whether or not they want to proceed with a development.  They were the re-developers of Stapleton Airport in Denver and many more extremely large developments around the country.  Some of the students are talking about potential transactions with him now. 

Today, we launch into the last two days of the Advanced Real Estate Finance course where the students will take their compounding and discounting business math skills to the next level on the HP 10B II and Excel Spread Sheets with over 40 preprogrammed templates to work from.  We will do “real estate development modeling” Front Door and Back Door Analysis and prepare  the final exam.

Very exciting!

- Walt Clements, Director of the LWREC

Real Estate Student Wins Huge Award!!

Shane Spencer, our Sherman Drieseszun Scholarship Recipient of last year, was awarded the "Entrepreneurial Student of the Year" at the 26th annual awards banquet this month.
Shane's advanced real estate education in addition to his entrepreneurial studies enabled him to create the "Green REIT" for energy oriented real estate investments. Shane has secured a quarter of a million dollars in venture capital funding to go public as soon as he secures one more IRS ruling on the offering memorandum.
Shane took every real estate class we offered and was a serious student. He also participated in the ULI Gerald D. Hines national competition earlier this year in collaboration with Kansas State's Architectural program. While we didn't get the "grand prize" for the Hines competiton, the participation itself was an invaluable experience.
Congratulations to Shane on his rapid journey to becoming a millionaire.

Real Estate Student Wins Huge Award

Shane Spencer, our "Sherman Dreiseszun" real estate scholarship reciepient has won the coveted top prize of the Entrepreuership school's annual competition to become the "Student Entrepreneur of the Year".

With the help of his advanced real estate education through the White Real Estate Center and his entrepreneurial classes, he created the 'Green REIT". Subject to a pending IRS ruling Shane has secured a quarter of a million dollars of venture capital to move his REIT to the open market.

"Shane enrolled in every real estate class offered and was an outstanding student in all" according to Professor Clements, the Director of the White Center. Shane also competed earlier this year in the Urban Land Institute

Second Full day of Urban Planning Studies

Vickie Notyce offered her side of the "Polsinelli/ Highwoods Vs "Save the Plaza Group?
It was indeed interesting to see the distinct opposite views of the same set of facts.
The class will be divided into opposing groups representing each side to present their view in an attempt to convince the City Council to stop or not stop the office building. (Our mock City Council will not be allowed to recuse themselves from the decision)

We learned how to become involved in the E-Scholars program with the direction of Beverly Stewart from the IEI department.

After a tour of the Miller Nichols Library and the new "Roo-bot," we reviewed other authors' views of Kansas City's overall growth based on sociol and demographic variables.

More to come......

Month 2, 2nd session of 14 sessions to get the MERE

The Executive Masters in Entrepreneurial Real Estate is now in it's second monthly session. Today and tomorrow we are learning from Professor Jim Scott about various theories of urban planning through the study of 21 authors on the subject. Extensive reading for this course has created a solid understanding of the challenges, purposes and practicality of developing, managing and conforming to a well thought out urban plan. From Paris, to New York, to Chicago, St, Louis and Kansas City, how they all grew the way thed did and why?

Did you know Edmund Bacon, the planner who re- designed the City of Philadelphia during the depression was Kevin Bacon's dad? (yes Kevin Bacon the actor)

Jan Marcussen, 4th district councilperson shared her perspectives this morning about the City of Kansas City's role and circumstances about the Polsinelli building proposed for the Country Club Plaza. Extremely interesting "back story" behind it all. There are many lessons we can learn from it all.

Tomorrow we hear from the "Friends of the Plaza" to hear their side of the story. This will be an interesting perspective.

Saturday, Dr. Jeff Englested from University of Denver will kick off the "Advanced Real Estate Financial Modeling Course" using Excel.

Entrepreneurial City

The Greater Kansas City Chamber of Commerce's recently announced "Big 5" ideas for the future of the city dovetail very nicely with the entrepreneurial emphasis of the Lewis White Real Estate Center's new degree programs (and the rest of The Bloch School). 

Blueprint to a Billion

This is a week of "WOW" not only in the classroom but outside the classroom as well.

Yesterday afternoon we visited the Metcalf South Mall in Overland Park, KS, which will serve as our subject property for the remaining 13 months of study in this program. We spent an hour and a half walking through and around the subject. Jim Harpool, Eric Mann, and their property engineer of 22 years representing the Morgan family provided us all the critical hard data for us to use in our analysis process. We are grateful for the support of people like the Morgan family and Jim Harpool to help us in this project. It will certainly tax the creative genius of our students.

Following our property tour, we attended the announcement event at the Bloch School about our new higher rankings nationally as an Entrepreneurial and Innovative school as well as the largest donation in the history of UMKC. Henry Bloch's $32,000,000 donation will double the size of the Bloch School Building and create the only building in any business school in the country designed exclusively for entrepreneurial and innovative instruction.

We finished up the day by attending the SIOR Development Day, which continues to draw the "Who's Who" of the commercial real estate community in Kansas City-- a huge turn out and a great opportunity for networking.

This morning Michael is walking us through "Blueprint to a Billion Dollars," explaining detailed, step-by-step processes to insure success as a real estate entrepreneur. His insight, refined through his own personal investments in a wide range of ventures, is very helpful in enabling us to see how we can apply this to our own new creative opportunities in real estate.

It's exam time this afternoon, covering the information learned from Dr. Bolman and Dr. Song. Following the exam Professor Jim Scott will be here to introduce our next topic of "Urban Planning," and I will introduce the "Real Estate Finance" class. Both will be taught over the next two months in a blended "on-line" and "in-person" instruction format.

Exee. Master's of Entrepreneurial Real Estate

The third day of our first "Immersion Week" is continuing to move at a fast pace. This morning the class evaluated a partnership structure through a 24 page case study complete with financial analysis. Techniqued for capital raising for your next venture, metrics to determine success of the proposed venture, pay-back rules of thumb, how to protect yourself, and some very interesting risk management perspectives and calculations. We learned not just how to calculate the metrics but the logic of how to use these metrics to explain the degree of risk for your own decision making and how to communicate it to the investors.

This afternoon we are embarking on a Harvard Real Estate Case Study focusing on the principles we have been learning.

It is fascinating having the instructors who not only teach well (lots of group interaction and discovery learning methodology) but who have also completed several years of research about their subject matter.

Insight of wisdom and experience. Very cool!

Second Day of EMERE

Dr. Bolman explored various leadership styles as well as providing tools for the students to identify their own personal leadership styles. I took the test as well and found it very revealing and constructive. Several videos were shown demonstrating different leadership styles and the attributes and applications of each one. It was a very insightful view from his recent research and book called, "Reframing the Organization"

After lunch Dr. Song presented detailed information about setting up a successful company by breaking it down step by step with processes that he found to be foolproof after 15 years of personal research he has done studying many kinds of companies. He instructed the groups to build a business plan for their real estate company including salaries, start up capital, responsibilities, and how big each of their firms will get using these principles.

The depth and detail of the information is truly powerful. The recognition of the nexus of human dynamics and economic realities are so very significant.

First day of Executive Master's in Entrepreneurial Real Estate

The welcome dinner last night at Benton's Restaurant was phenomenal with comments from Chancellor Morton and Dean Tan. Several of the faculty attended with all the students who enjoyed cocktails, food and stellar views of the Kansas City skyline at sunset.
How truly exciting it is to be involved in an inaugural initiative like this Executive Master's program to establish a higher level of excellence in real estate decision makers.
Today, after a brief orientation by Director Walt Clements, Dr. Michael Song led a discussion about what makes for a successful business venture and applied it to real estate.
The class developed a fool-proof model for success based on years of experience of thousands of business start ups. Dr. Song is the leading international researcher and lecturer on this subject.
Dr. Lee Bolman is scheduled after lunch to continue to build our valuable body of knowledge. His latest work is now published in over 10 countries. Wow, what an amazing experience.

A Great American Data Source

If you’re in a real estate-related field, you’re likely already using U.S. Census data regularly, at least indirectly. But with ongoing updates based on the 2010 Census and informative new tools available, it’s worthwhile to go directly to the source. The American Fact Finder is a good place to start for hoards of place-based demographic profiles, economic data, housing stats, and so on. Potential drill down into the data seems nearly endless.

Click the image below for an example of one new visualization tool with some local relevance.

Walt Takes Lease v Own Seminar On The Road

Walt Clements, Director of the Lewis White Real Estate Center, will be teaching seminars on Lease Versus Own analysis in several Midwestern cities at the end of July. Cities include St. Louis, Des Moines, and Omaha. Sorry Chicago, maybe next time.

Most classes provide at least 3 hours continuing education credit, and lunch is provided.

Register online at www.umkc.edu/whitecenter

LWREC Recieves Final Approval for Commercial Real Estate Masters Program

The Lewis White Real Estate Center received final approval from the Coordinating Board of Higher Education (CBHE) of the University of Missouri system last week to offer a Master’s of Science in Entrepreneurial Real Estate. It is the only Master’s Degree in Real Estate offered by an AACSB Accredited Institution within a 500 mile radius of Kansas City. The CBHE approval follows the decision made last month by the University of Missouri Board of Curators for this program to be offered in two formats. For those with a minimum of 5 years of experience in commercial real estate, there will be a 14 month Executive Format that includes instruction by 9 PhD’s (several from outside the area), 5 attorneys, 3 CCIM Instructors and a handful of local specialists in certain specialized areas. It will also include a week of international travel where they will be introduced to real estate professionals in other countries which will build their international networks while learning about Global Real Estate Issues. There will also be the traditional 2 year program offered. Both programs will be commencing in the fall of 2011.

Courses taught will include:

· Urban Planning

· Legal Contexts of Real Estate Decisions

· Market Analysis and Feasibility Studies

· Advance Negotiations for Commercial Real Estate with software

· Construction Means and Methods

· Taxation issue for Commercial Real Estate

· Corporate Real Estate

· Property Management

· Valuation Techniques and Practices

· Ethics and Values for Real Estate Decisions

· Global Real Estate which includes one week of international travel

· Advanced Real Estate Finance and Excel Modeling

· Real Estate Capital Markets

· Public and Private Finance

For more information, contact their website at www.umkc.edu/whitecenter.

President's Club Meets To Discuss CRE Issues

The Lewis White Real Estate Center at the Bloch School of Management of UMKC held its’ second annual President’s Club meeting at the home of the gracious Charles and Patty Garney. This informal gathering represents over 3,000 commercial real estate service providers in the Kansas City Metro area. This is the only venue where these 15 plus chapter presidents of national associations can gather socially and discuss issues of common interest within the area of commercial real estate. Commercial real estate is a multi-disciplinary field which is emphasized by the numbers of local chapters here is Kansas City. Each individual chapter ranges from 35 members to 250 members and covers the gamut of corporate real estate, architecture, retail real estate, Office real estate, Industrial real estate, commercial real estate lending, real estate education, women in real estate, property managers, facilities managers and other specialty areas. “We can simply do more for the greater good of our community by working together on some critical issues than we can by operating in our respective silos.” Says Walt Clements, the Director of the Lewis White Real Estate Center.

In Photo: Dan Musser, Lane Vance, Paul Neal, Anne Lemon, Linda Laurence, Jacki Older-Hefner, Jim Noe', Bill Early, Bob Mayer, Brian Votava, Shirley Harpool

LWREC To Offer Innovative Excel Real Estate Analysis Course

Coming up on June 23, 24 and 25 Dr. Jeffrey Engelstad, PhD visiting from the University of Denver will be teaching an advanced spreadsheet analysis course for the Lewis White Real Estate Center at the University of Missouri, Kansas City.

The coursework is geared towards seasoned real estate professionals already familiar with using TVM, IRR, and NPV in the analysis of real estate investments. The course delves further into the intricacies of modeling advanced real estate income streams into pro-formas and practical application of advances financial analysis. For more information or to register click here: Real Estate Financial Spreadsheet Analysis using Excel.

Not familiar with these concepts? Click here to find out more information on the graduate and undergraduate degree programs offered by the Lewis White Real Estate Center at UMKC.

New Federal Lease Accounting Standards

The upcoming changes to the Federal Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) will dramtically change how leases are shown on an organization's balance sheet.

Long-term leases have often been an off-balance sheet item, and some argue it was a tool for corporations to hide what is essentially "debt" in the form of monthly payments to a landlord. The new regulations will require these leases to instead be shown on the balance sheet as a long-term liability which will instantly impact debt-to-equity ratios and could trigger default clauses in some corporate contracts. Despite the pain of transitioning to the new system, proponents of the new standards argue it will allow a higher level of corporate transparancy and accountability.

On June 14, 2011, Walter Clements, CRE, CCIM, FRICS, Director of the Lewis White Real Estate Center along with David Donnelly, PhD, Professor of Accountancy for UMKC will co-instruct a seminar geared towards informing real estate professionals to learn how to proactively prepare their clients for this upcoming change in accounting rules. More information can be found here: http://www.bloch.umkc.edu/centers-institutes/lewis-white-real-estate-center/online-registration/real-estate-leases/index.aspx

Briarcliff Named as Master Developer For 'Horizons'

The city of Riverside, Missouri finalized a master development agreement yesterday with a unit of Briarcliff Development for the 'Horizons' site at I-635 and Hwy 9. The master plan (see above) was designed in conjunction with BNIM Architects and is comprised of 1.1 million square feet of office space set in a series of tree-lined canals along with 1.5 million square feet of industrial space.

Riverside, with its relatively sizable tax income from casino earnings, has spend millions over the past several years on infrastructure, including a large levee to prepare the site for development. Briarcliff is now the 6th developer since 2002 to attempt development of the site, but with its highly successful retail and office experience in the Northland, Briarcliff may just have the right combination of skills and knowledge to turn this blank canvas into a crown jewel for Kansas City as a whole.

Ugly Index

Double dip...or buy opportunity?

(*Note neither the 10 nor 20 city Case-Shiller Home Price composite indices directly incorporate the KC market, but they're still useful for capturing trends in other major metros/nationally.)