Strategic Planning for Real Estate Companies

FIN 6243
Fall 2019 (Tuesday, 3:30-6 PM in Eliot School 314)

Christopher B. Leinberger
Charles Bendit Distinguished Scholar and Research Professor of Urban Real Estate
Chair, Center for Real Estate and Urban Analysis
George Washington University School of Business
Funger Hall 213
202-425-6485
cleinberger@gwu.edu
www.chrisleinberger.com

Adjunct Professor:
David Barritt-Flatt
Director, Strategy & Innovation
Clark Construction
david.barritt-flatt@clarkconstruction.com
https://www.clarkconstruction.com/

Visiting Professor:
Charles (Charlie) Hewlett
Managing Director & Director of Strategic Planning
RCLCo
chewlett@rclco.com
http://www.rclco.com/charles-hewlett

Professor Leinberger’s office hours are 1:00 to 3:00 PM Tuesdays at 2131 G

Street, the Center for Real Estate and Urban Analysis. It is best to reserve a time
via email through Latashia Graham at lgraham@email.gwu.edu.

CONTACT HOURS: Students will spend 2.5 hours per week in class. Required
reading for the seminar meetings and written papers or projects are expected to average
4 hours per week plus 2 hours for the consulting assignment. Over the course of the
semester, students will spend 35 hours in instructional time and 85 hours preparing for
class and the consulting assignment.

LEARNING OBJECTIVES:

a. Since real estate is the largest asset class in the economy (about 35%), it is
exceedingly large and complex. As such, the first objective is to provide
an overview of the two major financial positions of companies in the
industry (capital risk and operating risk) and the various industry roles
which could be points of entry for the students.
 b. Define history and role of strategic planning in business in general and
real estate.
c. Understanding that the real estate economic cycle is the most severe in
business and is the key determinant of a company strategy.
d. Understand the components of a real estate company strategy (financial
position, industry role (s), mission, values, growth options, finance,
organization, etc.) and the implementation plan.
e. Explore various company strategies through case studies.
f. The class consulting project is to develop a “real world” strategic plan for
a Washington, DC based real estate company ending with a presentation to
senior management for possible adoption and implementation.
g. Determining where the student wants to and assistance with entering the
real estate industry with a job.

READINGS & MATERIALS:

Strategy for Real Estate Companies, Urban Land Institute (2008). Co-authored by
Charles Hewlett, who is a visiting professor of the course. Christopher B. Leinberger
(professor) wrote the first edition of this book.

Other readings will be available ion Blackboard.

GRADING:

 class participation (33%),

 strategy developed for the case study company (33%)
 final (33%).

COURSE OVERVIEW:

The built environment (real estate and infrastructure) represents 35% of the assets of
the U.S. and a comparable amount in other developed countries; it is possibly more for
developing countries. Real estate represents the vast majority of this amount, the rest
being infrastructure.

Long story short, real estate is a huge asset class, the largest in the economy.

Generally speaking, real estate as an asset class has not been professionally managed
until recently, beginning with the emergence of real estate as a publicly traded asset
class in the late 1980s and early 1990s. This meant that few real estate companies
actively engaged in the fundamental requirement of corporate management, strategy
planning. Only with the emergence of professional management in the 1980s was real
estate corporate strategy introduced. Today it is considered essential for dealing with
the complexity of the business and the importance of the long-term decision-making
required in the industry. However, many real estate companies are still deal-driven, not
focusing on where the company is heading in the long-term.
The textbook is Strategy for Real Estate Companies, published by Urban Land Institute
in 2008. This is an updated version of a book first written by Christopher B. Leinberger
(professor) in the early 1990s, also published by ULI. It has been updated by Gadi
Kaufmann and Charles Hewlett, senior managers of RCLCo, one of the leading real
estate advisory firms in the industry and former colleagues (the professor used to own
and manage RCLCo).

Professor Leinberger has held a number of roles in the real estate industry. They
include:
 Managing Director and Owner, RCLCo, the country’s largest real estate advisory
firm (1979-2000),
 Founding Partners, Arcadia Land Company, a New Urbanist and Transit-oriented
Development firm (1998-present),
 Founding Director and Professor, University of Michigan graduate real estate
program (2005-2012),
 Nonresident Senior Fellow, The Brookings Institution Metropolitan Policy
Program (2005-2017) and Board of Advisors, Brookings Bass Center for
Transformative Placemaking (2018 to present)
 Founder and President, LOCUS, Responsible Real Estate Developers, a
program of Smart Growth America, an environmental advocacy organization,
 Professor and Chair, Center for Real Estate and Urban Analysis, George
Washington University School of Business (2012-present)
Professor has written, co-written or contributed chapters to 15 books on real estate and
the built environment and written for many of the leading national US magazines. He is
a graduate of Swarthmore College and the Harvard Business School.

Charlie Hewlett will assist the professor in teaching this course, joining the class for
selective classroom teaching and case study consulting. Based upon his decades of
experience and writing the book on the topic, Charlie Hewlett is the leading real estate
strategic planning professional in the real estate industry.

David Barritt-Flatt, adjunct professor, will co-teach the class. Professor Barritt-Flatt
brings almost 17 years of experience in the real estate and construction industry, much
of it as head of strategic planning for Clark Construction Group, a $5 billion firm based in
the Washington, DC area. Professor Barritt-Flatt has his BS in civil engineering and a
Masters in Engineering Management, both from Cornell University.
COURSE SUMMARY:

Week # 1—Strategic Planning Overview (8-27)

Conceptual Issues:
 Introduction of students and professors
 What is strategic planning?
 The history of strategic planning in the general corporate world
 Late 20th century real estate industry: 19 standard real estate drivable sub-urban
products
 Structural shift in 21st century to walkable urban place
 Simple, formula-based single product approach versus complex, emerging
understanding of multiple product, place-based approach
 Reasons for Strategic Planning
 Universe of strategic options

Readings:
 Syllabus
 Introduction and Chapter 1 of the text

Week #2—Cycles, 4-Cells & Three Twos, plus Case Study Introduction (9-3)

Conceptual Issues:
 Three Cycles: introducing the bane of the industry and need for change in
strategy for each cycle
 Review: 4-cell land use matrix, real estate cycle/metro development
trends/corporatization of re/capital markets/autonomous vehicles/demography
 The Three Twos
 Introduction of Case Study Structure / Approach
 Overview of Case Study Company: J Street

Readings:
 Chapter 2 of text
 Publicly available information on J Street

Week #3— Mission, Vision and Core Values (9-10)

Conceptual Issues:

 Mission, Vision and Core Values (generally and for J Street)

 Different sources of cash flows for real estate companies
 Where money is made with income real estate
 Avalon Bay Case Study Discussion
 Industry Role introduction

Readings:
 AvalonBay case study in chapter 12
Week #4— Industry Roles, Part I (9-17)

Conceptual Issues:

 Industry Roles Strategy

 Capital and operating risk roles
 Make versus Buy
 Where money is made in homebuilding
 Quiz, sent after class for completion no later than Friday, 9-20 at 6 PM

Readings:
 Chapter 3 of text
 Crosland case study in chapter 12

Week #5—Industry Roles, Part II (9-24)

Meet at Carr Development/Clark Construction site in Bethesda (Red

Conceptual Issues:

 Operating Company Strategy Considerations

 Tour of Clark Construction site

Readings:
 N/A

Week #6—Customer Branding & Core Competency (10-1) with Charlie Hewlett

Conceptual Issues:
 Know your customer and what brand you are promising
 Existing core competencies and evaluation of need for new competencies

Readings:
 Chapters 4 and 5
 Bozzuto Group case study in chapter 12

Week #7— Growth Strategies & Profitability (10-8)

Conceptual Issues:
 Geography and product strategies options

Readings:
 Chapters 6 and 7 of the text
 Transwestern case study in chapter 12
Week #8 -- Organizational Strategies (10-15) with Charlie Hewlett

Conceptual Issues:

 Process versus project orientation

 Centralization versus decentralization
 Succession planning
 Compensation
 Cyclical organizational strategies

Readings:
 Chapters 8 of the text
 Review Crosland, LLC case study in chapter 12

Fall Break—no class (10-22)

Week #9— Case Study Assignment and Discuss with Client - J Street (10-29) with
Charlie Hewlett – Location TBD

Conceptual Issues:

 Strategy process
 Presentation / Q&A with J Street at 4:30 PM

Week #10 — Capital Strategies (11-5)

Conceptual Issues:
 When and who should be involved?
 Key Elements in the process and briefing book
 Strategic planning sessions
 Implementation

Readings:
 Chapter 9 of the text
 The Future of Real Estate Finance, Rutledge Press chapter (available on Outlook
on Blackboard)

Week #11— Down Cycle Strategies (11-12)

Conceptual Issues:
 Defensive and offensive strategies
 Market monitoring to trigger rethinking of strategy
 Other rationalization strategies
 Preparing for the upturn
 Strategy process
 Difference between drivable sub-urban and walkable urban strategies
Readings:
 Chapter 10 and 11 of the text
 Toll Brothers case study

Week #12—Review of Initial Findings re: J Street Strategy (11-19)

Week #13—Practice Presentation of J Street Strategy (11-26)

Week #14—Presentation of J Street Strategy (12-3) – Location TBD

Week #15— Final Exam

 Final Exam distributed by email after class on 12-3

 DUE Midnight Saturday, December 7th at midnight. No exceptions.

ACADEMIC INTEGRITY: The code of academic integrity applies to all courses in the
George Washington School of Business. Please become familiar with the code. All
students are expected to maintain the highest level of academic integrity throughout the
course of the semester. Please note that acts of academic dishonesty during the
course will be prosecuted and harsh penalties may be sought for such acts. Students
are responsible for knowing what acts constitute academic dishonesty. The code may be
found at: http://www.gwu.edu/~ntegrity/code.html

UNIVERSITY POLICIES:

Religious Accommodation

Students should notify faculty during the first week of the semester of their intention to
be absent from class on their day(s) of religious observance.
Faculty should extend to these students the courtesy of absence without penalty on such
occasions, including permission to make up examinations. Faculty who intend to
observe a religious holiday should arrange at the beginning of the semester to
reschedule missed classes or to make other provisions for their course-related activities.
Disability Support Services (DSS)
Any student who may need an accommodation based on the potential impact of a
disability should contact the Disability Support Services office at 202-994-8250 in the
Rome Hall, Suite 102, to establish eligibility and to coordinate reasonable
accommodations. For additional information please refer to: gwired.gwu.edu/dss/

Mental Health Services 202-994-5300

The University's Mental Health Services offers 24/7 assistance and referral to address
students' personal, social, career, and study skills problems. Services for students
include: crisis and emergency mental health consultations confidential assessment,
counseling services (individual and small group), and referrals.
counselingcenter.gwu.edu/