RePre1.doc
Rev 9/10/98
Babson College
F.W. Olin Graduate School of Business
Some Comments on Presentations
and the Real Estate Development Course
One of the prime skills, useful in any management role, and particularly
in project oriented roles such as real estate developer, is being able
to succinctly and forcefully present your model of the situation and your
proposal for action. We have therefore built into the Real Estate Development
Course a number of opportunities for you to develop and demonstrate these
skills. Specifically:
Role-Play
At various points in the course we will make use of role-play to
help explore situations, analyses, and or proposals, generally, these role
plays have at least three objectives.
-
To create time and space for fully exploring an idea.
-
To ensure that various role-based aspects of an issue are well-explored.
-
To give you opportunity to "try-on" various roles in which you will
have the "right" to advocate a biased, self-serving recommendation, or
to refute such a proposal by others - often leading to negotiation and
resolution of an issue.
To achieve these goals, we use role-plays in at least two key ways.
Sometimes we will ask you to take part in a spontaneous "on-the-spot" role-play,
with little or no time for preparation.. Your task in these situations
is to "jump-in" and do the best you can to state your view of the situation
and to propose the analysis or action you feel appropriate to that role.
If others taking the same role are not happy with how you are doing it,
they may try to intercede and play the role differently.
On other occasion we may "pre-assign" roles and ask you and your
study group to prepare to take on a particular role and to maintain this
role -- even if it is a role that requires you to take a position with
which you do not personally agree -- in order to fully explore different
views.
In these role-play situations, take advantage of the opportunity
to play "devil's advocate" by taking particular view of the situation -
however biased - and using it to shape an analysis and negotiating position
and making a "mini-presentation" of that view. Naturally, in these situations,
we try to provide opportunity for you to state your real views.
Case Presentations
We will also ask each team to participate in making at least one
formal case presentation, usually taking either the role of the developer
seeking a potential partner, investor, lender or tenant for a project,
or in the role of partner, lender or tenant responding to the developer's
offer. In these more formal presentation situations, each member of your
group should take a more or less equal role. The group should take the
available time -- usually 15 to 20 minutes -- to clearly state your joint
view of the key elements of the situation, develop your key analyses, and
back up your proposal for action.
Presentation Scope
Here are some rules of thumb that may be helpful in planning such
presentations:
-
The case itself usually contains a proposal. In our view, it is seldom
the best proposal the developer could make. Your job is to improve on it
by better explaining the situation, better defining the proposal so as
to make it more attractive, and by being more creative about the project
as a whole. DO NOT fall into the trap of merely repeating case facts.
-
The case also usually contains part, if not all, of a possible alternative
proposal or reaction. Your task is to do a better job than the case of
expanding,analyzing, proposing and presenting such a response.
There is a tendency by teams to split presentations into parts which
seem logical such as Market, Competition, Economics, and Proposal. It usually
turns out that there is very little to say about two or three of these
parts (depending upon the case) so the team members assigned those parts
end up trying to fill 5 minutes with one-minute presentations. They end
up speaking very slowly, fidgeting a lot, repeating what others have said,
and feeling very foolish. Then, when the person with the real key points
gets his or her turn, there is too little time left to present these analyses
well.
To avoid this, the team should first solve the problem, then decide
what you want to present, and split the presentation equally among the
team members. This may create some awkward transitions, but it is a lot
better than wasting time on parts where there is little to say and then
having to squash the key aspects to stay within the allotted presentation
time.
Presentation Techniques
There are also some presentation techniques that can help:
-
Have a strong "storyline".
-
Use outlines, clearly presented visuals, clear and concise numbers exhibits
and diagrams to help tell your story. They are most effective when titled
with an explanatory phrase that helps the viewer quickly understand the
key point of each visual. Some examples follow:
-
Rather than "Project Economics" why not a title like:
"Project covers debt service 1.2x within 1 year"
-
Rather than "Pro Forma" why not
"Even with modest rental increases, ROI is 34% over first 7 years"
-
Rather than "Rent Comparison", why not
"Initial rent of $27 will place project in highly attractive
niche"
-
Rather than "Risk Analysis"' why not
"Sensitivity analysis shows risk to investor is low"
Such highly focused action titles can greatly enhance presentations.
Presentation Content
While all presentations are different, there are some commonalties
that run through many real estate issues. And there is always the need
to present material purposefully -- that is, for a purpose -- the purpose
being to convince someone else to accept and support your position. Some
ways to do this include the use of such format elements as these:
As you know, we are here today to ask you to...
...provide $5.3M long-term debt finance for a housing project in
Allston...
...become our equity partners in a $6.3 million warehouse project
in Dedham ...
...consider opening a retail store in our new Mall in Sudbury...
-
Presentation of Uniqueness/Strengths
What makes this project uniquely profitable is that..
...despite recent rapid building of offices and homes in that area,
there are no new warehouse facilities available or planned ...
...we believe we have locked up the only suitable location for a
Shopping Mall in that area ...
...by having 50% of the office space pre-let, we are sure we can
reach breakeven faster than any other project in the area...
-
Refutation/Admission of Weaknesses/Risks
…of course there are certain risks in the project, but we believe
we have planned appropriate action to deal with them...
...we have a fixed price construction contract with a large, reputable
contractor with experience in this market ...
...we have arranged standby finance of $1 million in case rent-up
is slow...
The key to the economics of this project are the...
... the rapidly rising rents we can expect in this area...
...the fast rent-up that will prevent early year losses ...
... the low-cost, long-term loan...
... the relatively high (low) equity required...
What we are asking you to do is...
...put up the $1 million equity, in return for 25% ownership of
the project ..
...move your offices here, by December, in return for which we will
provide 3 months free rent and take over the leases on your existing space...
...provide $6.5 Million in construction finance and then roll it
over into a $6.5 Million, 15 year loan on a 30 year schedule..."
But that isn't enough. You have to really ask:
...now, what do you think about that ...
...is there anything else you need to know before you can make a
decision...
...can we shake hands on it now and let the lawyers begin work on
the documents
By using these sorts of "purposeful" approaches to a presentation, you
will find that many of the topics typically receiving special coverage
in a presentation are, instead, "swept-in" as part of the basic flow of
the presentation. In this way, the presentation becomes much shorter and
more to the point, as one is not giving information for its own sake, but
only as support for a key link in the presentation story you are trying
to tell. For example:
-
By telling the project story in a more or less sequential way, you can
often establish the logic of why you want the project to go ahead, how
you overcame obstacles in your analysis, and where you ended up.
-
Alternatively, by taking an issue-by-issue approach, you can establish
that you have treated all possibilities.
-
In the course of this "telling," you can include references to the contributions
of your project team members, and describe these team members in a purposeful
way, rather than merely listing them.
-
By showing how your design will produce higher rents, or lower maintenance,
or provide more square footage to lease you will both display the design
and show its importance.
-
By placing the marketing plan for your project in its competitive framework,
you will identify the area, tell of its trends, specify its strengths and
weaknesses, and state how you plan to overcome any threats, without having
to go through long lists of dry facts about competition.
-
By telling how you plan to deal with risks, you expose what the risks
are, but at the same time, you counter them.
-
By clearly showing what each participant is giving and getting, you
deal with the ever-present issue of "fairness" among them.
Conclusion.
Your task, then, is to work at improving your skills in presentation
by becoming very self-aware about how you structure your ideas and communicate
them to others, using the types of techniques described above. We consider
this so important to your success as a manager, and particularly as a real
estate developer that we will devote considerable attention to it throughout
the course.
_______________________________
Copyright © l987 Professor Larry Isaacson
This note was prepared by Professor Isaacson as an aid to students
making presentations in the Real Estate Development Course.