An Interview With John McMahan

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					A supplement to The Institutional Real Esate Letter

          REAL ESTATE LETTER                                    Special Report

                        An Interview With John McMahan
Dohrmann: John, you’ve been involved in the real
estate industry for many years and have experience in
pension real estate, REITs and real estate consulting.                                        John McMahan, CRE is
Recently you established Centerprise, a non-profit firm,                                      executive director of The
that among other things, is involved in management                                            Center for Real Estate Enter-
training. Just what is Centerprise?                                                           prise Management (Cen-
                                                                                              terprise) and adjunct
McMahan: Centerprise is short for the Center for Real                                         professor at the Fisher Cen-
Estate Enterprise Management. We are a non-profit cor-                                        ter for Real Estate and
poration, based in the Presidio of San Francisco. We                                          Urban Economics, Haas
focus on continuing education for managers of real estate                                     School of Business, Uni-
and land-use enterprises.                                                                     versity of California, Berke-
     Our goal is to be involved in all facets of contin-                                      ley. Centerprise is a
uing management education. We currently are heav-                        John McMahan         non-profit organization
ily involved in management training, but are in the                                           focusing on providing
process of expanding our research activities and even-               research and management training exclusively for
tually will add publications and conferences.                        the real estate industry. See
Dohrmann: Who runs Centerprise?                                      for more information.
McMahan: I’m the executive director responsible for
day-to-day operations. An operating board comprised
of senior real estate managers oversees our operations,           Dohrmann: How are the programs developed?
including approving the annual training and research
agenda. We also have an advisory board comprised                  McMahan: We receive suggestions from our students,
of academicians and industry people who advise Cen-               from discussions with real estate CEOs and from a con-
terprise regarding its research and training programs.            tinuing review of issues impacting real estate manage-
Several members of the advisory board also are                    ment. We also rely heavily on our advisory board. When
involved in teaching individual training classes.                 we are planning training courses, we discuss the pro-
                                                                  posed subject with the board member most experienced
Dohrmann: Why did you get involved in such a venture?             in the area we are tying to cover. In some cases, board
McMahan: During most of my career, I have had the                 members may participate as instructors in a training ses-
good fortune to teach in university settings while also           sion related to their background and experience.
actively managing real estate companies. I’ve taught
real estate for more than 20 years at the Stanford and            Dohrmann: Where do you get your faculty?
U.C. Berkeley graduate business schools, with many                McMahan: Our academic faculty is comprised of
of the courses focusing on managing the real estate               instructors at many of the top universities — Harvard,
enterprise. In recent years, I’ve become convinced real           Stanford, MIT, U.C. Berkeley and Johns Hopkins. Most
estate also needs a forum for continuing education                of the courses also include an industry faculty mem-
beyond graduate school, where the focus can be on                 ber to provide a balanced theory/practice point of view.
management issues.                                                Some courses such as Transactions, Marketing and Cor-
Dohrmann: Why management issues?                                  porate Real Estate Finance are taught exclusively by
McMahan: Real estate has lagged other industries in               industry people. In general, we try to get the best fac-
the application of new management techniques, more                ulty from wherever we can.
efficient organizational structures and the creative use          Dohrmann: Centerprise just completed its first year of
of technology. Through high-quality management train-             training. How did it go?
ing programs and targeted management research, Cen-
terprise can help real estate firms successfully bridge           McMahan: We had 82 students from 42 real estate
this gap.                                                         organizations attending 11 training sessions. Most of
Dohrmann: What is the strategy behind Centerprise’s               these sessions were held at our new training facility in
management training program?                                      San Francisco’s Presidio. Our class size ranged from
                                                                  four to 17 students, averaging about eight students. We
McMahan: Our strategy is to offer courses that are                limit the size of each class to 20 students because the
comparable in quality to those offered by the gradu-              intense nature of training and the high level of per-
ate business schools but focused specifically on man-             sonal interaction.
aging a real estate/land-use organization. Our goal is
to bring general business best practices to real estate.          Dohrmann: What do you mean by “intense?”

                                                      2001 s SPECIAL REPORT                                                   1

McMahan: The small class size encourages a high level         McMahan: We will be offering 11 courses in San Fran-
of interaction between and among the students and             cisco, Los Angeles, New York and Washington, D.C.
the session leader. We amplify this through small             Seven of these will be based on successful courses
discussion groups, business cases, testing and role-          from last year’s program — leadership, marketing, trans-
playing. We try to place the student in real world man-       actions, cycles, fundamentals, and corporate real estate
agement situations as much as possible.                       strategy and finance. In addition, we will be offering
                                                              four new courses:
Dohrmann: What kinds of firms do the students typ-
ically come from?                                               s Benchmarking: The Key to Improved Performance
McMahan: It was well distributed across the real estate
spectrum. About a third were employed by investment             s Managing Global Real Estate Enterprises
advisers, a quarter by REITs and 13 percent were cor-
porate real estate managers. The remainder came from            s Marketing Real Estate Investment Products II
financial institutions, developers, opportunity funds,
pension funds and non-profit organizations.                     s Improving Real Estate Negotiating Skills

Dohrmann: What level of management was represented?              Marketing II will be our first pre-requisite course,
                                                              open only to students who have completed Marketing I.
McMahan: Approximately half were middle managers,
another third senior managers and the remainder entry-        Dohrmann: Is Centerprise doing anything else in the
level managers. This was pretty much as expected              training area?
because our primary focus is on middle management,
                                                              McMahan: We also are beginning to develop cus-
as it is the largest market and the one with the great-
                                                              tomized training programs, designed specifically to the
est need. We did, however, offer a four-day entry-level
                                                              requirements of individual organizations. These highly
course for students with little or no real estate back-
                                                              tailored programs can range from participation by Cen-
ground and are now developing a CEO-level program
                                                              terprise in the firm’s own training program to relatively
for Spring 2002.
                                                              extensive sessions in which Centerprise develops the
Dohrmann: What does it cost to attend one of your             entire program. This spring, we conducted three cus-
training sessions?                                            tom training programs.

McMahan: Our pricing policy is to be less than the            Dohrmann: You’ve mentioned that you’re expanding
graduate schools but more than than trade association         Centerprise’s research program. What are your plans?
programs, which often are subsidized by service
                                                              McMahan: Our advisory board recently approved sev-
providers. Centerprise’s average price is $830 per stu-
                                                              eral future research topics in the areas of operating
dent per day, although it varies among sessions. We
                                                              firm management, corporate real estate management,
offer significant discounts, however, with more than
                                                              pension fund management and land-use management.
70 percent of the students last year receiving tuition
                                                              During the next few months, we will be selecting a
discounts. These discounts averaged about 15 percent
                                                              few topics on which to concentrate.
of the tuition price.
                                                                  I’m also recruiting a research director as well as
     Some of the discounts were significantly higher. A
                                                              seeking foundation funding for one or more research
firm registering five students early, for example, received
                                                              programs for the coming year. Ultimately, we see a
a discount of 25 percent. The firm had to select the
                                                              close tie between our research and training programs.
courses they wanted but didn’t have to identify indi-
vidual students until two weeks before the class. This        Dohrmann: John, thanks for your time. Good luck
gives senior management flexibility in determining who        with Centerprise. y
will attend the sessions, taking into consideration work-
load, travel schedules and other factors. Several firms
used this approach this spring, and we are repeating
the offer this fall.                                                          CENTERPRISE
                                                                       THE CENTER FOR REAL ESTATE
Dohrmann: How have the students responded?                               ENTERPRISE MANAGEMENT
McMahan: Generally, we receive high marks. On a                                 P.O. Box 29390
scale with a maximum of 10, our average course rat-                       220 Halleck Street, Suite 200
ing was 8.7. Typical comments include statements such
as, “We really like the smaller class size,” “I enjoy hav-               San Francisco, CA 94129-0390
ing access to industry thought leaders,” and “What a                         Phone: (415) 561-2200
great training facility!” Students also have given us con-
structive criticism, and this has been helpful in plan-                       Fax: (415) 561-2205
ning the Fall 2001 program.                                              Web site:
Dohrmann: What’s in store for the fall?

                                                 2001 s SPECIAL REPORT                                               2

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