Developing Real Estate Case studies with the Real Estate Industry: “The SITQ Case”

1. Developing Real Estate Case studieswith the Real Estate Industry:“The SITQ Case” Prof. Dr. Ingrid NAPPI-CHOULET, ESSEC Business School, France Wien, 4th December 2009.

2. 1. Introduction • Dev. of new training programs centred on real estate management and finance at graduate, postgraduate or executive levels. • However and paradoxically, such initiatives of real estate courses inside MBA programs or Business Schools education are not yet such developed in European countries. • The ecch (European Case Clearing House) case collection of management case studies.

5. Real Estate Case studies In this context, management and real estate case studies examples for training and education are still very few and concern more US or Asian experiences than European ones (see for example the ECCH case studies catalogue). The Cases of 77 Avenue des Champs Elysées and T1 Tower in La Défense Business District constitue the last and recent real estate case studies in the ECCH collection.

6. 2. The « T1 Tower » case study • A Multimedia Case study at ECCH library; This multimedia case is also available as a multi-use / networkable version • In this case study, students play the part of an asset manager at SITQ. The manager must analyze the real estate market in the Paris-La Défense business district in order to analyze strategic opportunity for the development of an important, speculative real estate project, the T1 Tower, in 2004. • In studying the case, students will: • discover SITQ, • learn how to analyse propertymarkets, use the correct indicators, and manage a cash flow analysis.

11. Two parts in the case (with a specific access code) • Part 1: Property Market Analysis • SITQ strategy in general, • Paris CBD commercial property markets and the property in its market, and its cycles. • Students should read all case documents and listen to the video and provide a general and professional overview as of 2000, 2004 and today. This should be done before completing the financial analysis. • Part 2: Financial analysis • Analyse of the financial term sheet. • Students have to look at the term sheet to compute basic information in the Excel sheet. Then, they will have to base their indicators on the property market analysis from Part 1 and analyse the feasibility study of developing the T1 tower.

15. 3. Teaching with cases ► Bringing the real world into your classroom ! - Classroom Management: - Small groups of students. - The case should be done in 2 or 3 three-hour class periods. - It could follow material on Property Market Analysis and Financial Analysis of Income-Producing Real Estate

16. Case Objectives • Determine appropriateindicators for an accurate property market analysis. • Synthesize information and data from various sources into an accurate Executive Summary. • Become aware of market cycle influence on investment/development decision making. • Calculate IRR by applying the appropriate discount rate from market analysis - Examine the various components of real estate return; • Analyse sensibilities: IRR before and after leverage

17. Conclusion The case is of benefit to: • Students: • Understanding and exploration of the real business world in the classroom • Learning from real stories and cases which can help students make sense of theory and will focus on the importance of studying decision makers as well as analysing strategic decision making • Teachers: • Enhancing the learning experience of the students • Practising the discussion process with feedback • In executive education, learning more in sharing experiences

18. Conclusion The case is of benefit to: • The Industry (SITQ): • Express its own strategy • Gain in communication amongst students • First experience of the corporate culture • Work experience placement

19. Thank you for your attention ! For more information: nappi@essec.fr