Tips for Competitors

Tips For Competitors

The following comments come from actual jurors who have served in previous Hines Competitions:

The competition entries need to inspire the jurors, property owners, and community to believe that something is possible, even though they have not seen or imagined it before. That means it has to provide vision around an idea that seems bolder than expectations, but when thought through, eminently do-able. People should be able to see that the effort and money spent is creating tangible public value, and not being sucked up by unnecessary infrastructure or similar expenses.
Presentation of boards (look, color, clarity, charts are easier to read than words) is really important. We have very little time to try and figure out the hidden subtle points.
If the returns aren’t high enough, the boards are irrelevant.

Remember, you are presenting as a team, not five individuals, and your presentation should have a cohesive look that reflects that. If you make it to the finals, make sure you rehearse. Good luck.
This is the best opportunity I have seen for the integration of design, finance and marketing in a graduate level design competition.  It is more like the real world than other such efforts and deserves your very best efforts not just to win a great prize, but also to familiarize yourselves with the environment you are headed into.

Regarding the financial components:

• Pro forma overall

The purpose of a pro forma is to communicate the developer’s understanding of the potential value of a project after analyzing the costs and income streams for a given project. It is the developer’s best estimate of the future, using as many inputs as are necessary to establish that the project is a viable one that will meet the expectations of the capital investment. The pro forma should in the whole tell the financial story in a way that aligns with real world expectations.

• Understandable Presentation

The presentation materials should be presented in the ULI-suggested format or a competitor chosen format that provides a complete and orderly demonstration of the key components that would be needed to persuade capital investors to seriously investing in the project – both debt and equity – without an interview or the opportunity for the competitor to explain his or her presentation.

• Completeness

The summary page should be complete. It should demonstrate knowledge of the market (unit pricing for costs and income), fully depict cash flows, valuations, and returns to the investor(s).

• Accuracy

The financial presentation should deliver accurate information. Assumptions should accurately reflect the costs and conditions in place in the project market. 

• Market Costs and Income

Development costs should include market reality and include hard costs, soft costs, and financing costs. The timing of the occurrence of costs should reflect the construction/completion schedule. Rents and sales prices should be at market for the site and the product type. In addition the timing of income should match the deal.

• Capital Sources 

Are the sources realistic and available?

• Debt/Equity Ratio

The debt-to-equity ratio should reflect current market conditions.

• Debt Cost and Term

For construction debt, are the rates and terms in congruence with the market?

• Repayment Schedule

Do repayments match the debt terms above?  Is the repayment the most value-effective?

• Return to Investor (IRR)

The internal rate of return should match market expectations. Is it calculated correctly?

• Supply v. Demand

Students should design and build to market demand as presented in the problem or as demonstrated in the area of the project.

• Product Mix and Timing

Because the project is multi-year with several phases, the phasing is critical. The product delivery should be measured by quantity and appropriateness in relation to market expectations. In reviewing the pro forma, the development plan should be in a chronological order that makes sense for the project and the surrounding area. In mixed-use developments, the products must be compatible.

• Development Timing

The critical path for development needs to take into account the whole development picture including, for example, the cost and availability of capital, entitlement processes, market influences, and supply and demand.

• Income Timing

Initial income should logically flow from completion through stability.

• Disposition Timing

Timing is everything. For income producing developments, was the hold period feasible?