A student's take on the new MIPIM format - the Investor Quest.
Wisconsin MBA students in real estate are at MIPIM this week, attending the sessions, networking and taking the temperature of the event. For these students, one of the most exciting sessions so far was Wednesday’s “Investor Quest.”
Something new for MIPIM, four projects in need of investment capital were presented to a panel of angel investors with £20 million to allocate between the projects. While all four projects were in the UK, they varied by development type, as well as risk and reward characteristics. They were:
- £10-11 million of equity capital for the repositioning of a mixed use development in downtown Manchester known as Spinningfields;
- 300,000 SF speculative office building known as the Sovereign Street development in Leeds – the fastest growing city in the UK;
- £50 million of equity capital for Hammersmith Grove, a proposed 100,000 SF speculative office project in the West End of London;
- equity investment in land at a development known as the Royal Docks in London, in a primary growth region of London.
A very interesting format, it gave the audience an invaluable opportunity to witness an investment pitch for equity investors. From a student’s perspective, hearing the questions that the investors had concerning each of the projects was an education, as it would be too for anyone wanting to improve their deal pitch. Panelists asked about risk and return, exit strategy, growth potential, and the amount of developer involvement in the profits and losses of the projects. The main takeaway was the importance of making reasonable projections in a pitch to investors and justifying these projections with as many numbers as possible.
Ultimately the investors were most impressed by and allocated the majority of their capital investment to the Spinningfields and Hammersmith Grove projects, due mostly to their limited risk and greater ability to forecast future returns due to their shorter-term investment requirements.
This was an excellent experience and a great break from the traditional panel discussions to learn about the real life experience of raising investment capital for development projects, as well as identifying the types of investments in which to allocate capital from an investor’s perspective. It’s an experience that will last long after the conference is over.
The University of Wisconsin has more than 100 years of history in real estate education, research and outreach through community and professional partnerships. MBA students in real estate attending MIPIM are reporting their takeaways from the day’s sessions at the Wisconsin Real Estate Viewpoint.
Top image credit : Photobank gallery