Young Leaders Group Real Estate 101 Series: The Art of Negotiation

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1 Young Leaders Group 6:00 PM to 8:00 PM CoStar Group, Inc L Street NW Special thanks to our event sponsor!

2 AGENDA 6:00 6:30 p.m. Registration, Refreshments, and Networking 6:30 6:35 p.m. Welcome & Introductory Comments 6:35 7:40 p.m. Presentation Michael Jacoby Broad Street Realty Chuck Schilke The Johns Hopkins University Real Estate Program 7:40 8:00 p.m. Questions and Answers 8:00 p.m. Informal Networking at 14K Restaurant & Lounge Hamilton Hotel at th Street NW

3 Speaker Biographies Michael Jacoby Chief Executive Officer, Broad Street Realty Michael Jacoby is the co-founder and Chief Executive Officer of Broad Street Ventures, LLC, and its wholly owned subsidiary, Broad Street Realty, LLC. Mr. Jacoby has more than 28 years of experience in the real estate industry and is an expert in large-scale leasing, acquisition, and development transactions. He has completed more than fifteen million square feet of leasing, development, and acquisitions throughout the United States and has a strong knowledge base of the Washington, D.C. metro area. Mr. Jacoby personally focuses on company strategy, developing and retaining talent at Broad Street, and working on key property acquisitions. Recently, Broad Street Realty has emerged as an active acquirer of retail shopping centers throughout the Mid-Atlantic, with a growing property management portfolio and a diversified commercial brokerage platform with offices in Maryland, Virginia, and Colorado. Prior to Broad Street, Mr. Jacoby co-founded Core Location LLC, a firm focused on the redevelopment of largescale data centers. During his time at Core Location, Mr. Jacoby was instrumental in the acquisition, financing, redevelopment, leasing and sale of the 1.2 million square foot Lakeside Technology Center in Chicago, Illinois, the San Jose Technology Center in San Jose, California, and the Atlanta Technology Center in Atlanta, Georgia. Prior to co-founding Core Location, Mr. Jacoby was senior vice president and manager of the Fred Ezra Company, based in Bethesda, Maryland. He also served on the Ezra Board of Directors. Mr. Jacoby holds a Bachelor of Science degree from Washington & Lee University in Lexington, Virginia. Mr. Jacoby resides in Washington, D.C. with his wife Nathalie and five children. He is very involved in his community and is a competitive triathlete. Chuck Schilke Director, The Edward St. John Real Estate Program, Johns Hopkins University Mr. Schilke is Senior Lecturer and Director of the Part-Time Program at the Edward St. John Real Estate Program of the Johns Hopkins Carey School of Business. His teaching and research focus on corporate real estate, real estate development, real estate finance, and healthcare real estate. In addition, Mr. Schilke has worked with the corporate real estate function of Exxon Mobil and The American National Red Cross. Mr. Schilke previously created and served as the Associate Dean of the Georgetown University Master of Professional Studies in Real Estate program, which now has over 300 students. Before returning to academia, he served for 25 years as a lawyer at major law firms, corporations, and nonprofits in Boston, Washington DC, and New York City. He is a member of the Counselors of Real Estate and numerous other professional organizations.

4 Real Estate 101 Glossary Capitalization Rate: A percentage that relates the value of an income-producing property to its future income, expressed as net operating income divided by purchase price. Conditions of Approval: In relation to a planning permit granted by a local council means that the approval is subject to such conditions or restrictions as the planning scheme may impose to further the objectives of the planning legislation. Due Diligence: The practice of investigating a potential investment. This comprises of reviewing financial records and anything else deemed material to an investment. Sellers also typically perform a due diligence analysis on the buyer. Items that may be considered are the buyer's ability to purchase, as well as other items that would affect the purchased entity or the seller after the sale has been completed. Distributive Negotiation: Is also sometimes called positional or hard-bargaining negotiation. It tends to approach negotiation on the model of haggling in a market. In a distributive negotiation, each side often adopts an extreme position, knowing that it will not be accepted, and then employs a combination of guile, bluffing, and brinksmanship in order to cede as little as possible before reaching a deal. Distributive bargainers conceive of negotiation as a process of distributing a fixed amount of value. Dispositional Affects: Affect the various stages of the negotiation process: which strategies are planned to be used, which strategies are actually chosen, the way the other party and his or her intentions are perceived, their willingness to reach an agreement and the final negotiated outcomes. Positive affectivity (PA) and negative affectivity (NA) of one or more of the negotiating sides can lead to very different outcomes. Easement: A right of use over the property of another created by grant, reservation, agreement, prescription or necessary implication. It is either for the benefit of adjoining land, such as the right to cross A to get to B, or for the benefit of a specific individual, such as a public utility easement. Entitlement: A legal agreement with the governing municipality to allow a certain building type to occur on the site. Entitlements outline the density, function and setback requirements allowed for the property. First Refusal Right or Right Of First Refusal (Purchase): A lease clause giving a tenant the first opportunity to buy a property at the same price and on the same terms and conditions as those contained in a third party offer that the owner has expressed a willingness to accept. Integrative Negotiation: Is also sometimes called interest-based or principled negotiation. It is a set of techniques that attempts to improve the quality and likelihood of negotiated agreement by providing an alternative to traditional distributive negotiation techniques. While distributive negotiation assumes there is a fixed amount of value (a "fixed pie") to be divided between the parties, integrative negotiation often attempts to create value in the course of the negotiation ("expand the pie"). It focuses on the underlying interests of the parties rather than their arbitrary starting positions, approaches negotiation as a shared problem rather than a personalized battle, and insists upon adherence to objective, principled criteria as the basis for agreement. Lease Agreement: The formal legal document entered into between a Landlord and a Tenant to reflect the terms of the negotiations between them; that is, the lease terms have been negotiated and agreed upon, and the agreement has been reduced to writing. It constitutes the entire agreement between the parties and sets forth their basic legal rights. Letter of Intent (LOI): A letter that describes in detail an intention to act on something. Normally it is a bid or offer to purchase a facility or facilities, which includes such information as the proposed purchase price, lease term and

5 type of lease, renewal options, mortgage contingency, terms of a security deposit, warrant position, fees and expenses, etc. Listing Agreement: An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation. Negotiation: Is a dialogue between two or more people or parties, intended to reach an understanding, resolve point of difference, or gain advantage in outcome of dialogue, to produce an agreement upon courses of action, to bargain for individual or collective advantage, to craft outcomes to satisfy various interests of two people/parties involved in negotiation process. Negotiation is a process where each party involved in negotiating tries to gain an advantage for themselves by the end of the process. Negotiation is intended to aim at compromise. Operating Expenses: The actual costs associated with operating a property including maintenance, repairs, management, utilities, taxes and insurance. A landlord s definition of operating expenses is likely to be quite broad, covering most aspects of operating the building. Pass Throughs: Refers to the tenant's pro rata share of operating expenses (i.e. taxes, utilities, repairs) paid in addition to the base rent. Percentage Lease: Refers to a provision of the lease calling for the landlord to be paid a percentage of the tenant's gross sales as a component of rent. There is usually a base rent amount to which "percentage" rent is then added. This type of clause is most often found in retail leases. Purchase Offer: A detailed, written document that makes an offer to purchase a property, and that may be amended several times in the process of negotiations. When signed by all parties involved in the sale, the purchase offer becomes a legally binding contract, sometimes called the Sales Contract. Rental Concession: Concessions a landlord may offer a tenant in order to secure their tenancy. While rental abatement is one form of a concession, there are many others such as: increased tenant improvement allowance, signage, lower than market rental rates and moving allowances are only a few of the many. Sale-Leaseback: An arrangement by which the owner occupant of a property agrees to sell all or part of the property to an investor and then lease it back and continue to occupy space as a tenant. Although the lease technically follows the sale, both will have been agreed to as part of the same transaction. Shell Space: The interior condition of the tenant's usable square footage when it is without improvements or finishes. While existing improvements and finishes can be removed, thus returning space in an older building to its "shell" condition, the term most commonly refers to the condition of the usable square footage after completion of the building's "shell" construction but prior to the build out of the tenant's space. Shell construction typically denotes the floor, windows, walls and roof of an enclosed premises and may include some HVAC, electrical or plumbing improvements but not demising walls or interior space partitioning. Tenant Improvements: Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by the landlord. Tenant Improvement ( TI ) Allowance or Work Letter: Defines the fixed amount of money contributed by the landlord toward tenant improvements. The tenant pays any of the costs that exceed this amount. Also commonly referred to as "Tenant Finish Allowance. Triple Net (NNN) Rent: A lease in which the tenant pays, in addition to rent, certain costs associated with a leased property, which may include property taxes, insurance premiums, repairs, utilities, and maintenances.

6 Under Contract: A property for which the seller has accepted the buyer s offer to purchase is referred to as being under contract. Generally, the prospective buyer is given a certain period of time in which to perform its due diligence and finalize financing arrangements. During the period of time the property is under contract, the seller is precluded from entertaining offers from other buyers. R.G. Shell identified five styles/responses to negotiation. Individuals can often have strong dispositions towards numerous styles; the style used during a negotiation depends on the context and the interests of the other party, among other factors. In addition, styles can change over time. 1. Accommodating: Individuals who enjoy solving the other party's problems and preserving personal relationships. Accommodators are sensitive to the emotional states, body language, and verbal signals of the other parties. They can, however, feel taken advantage of in situations when the other party places little emphasis on the relationship. 2. Avoiding: Individuals who do not like to negotiate and don't do it unless warranted. When negotiating, avoiders tend to defer and dodge the confrontational aspects of negotiating; however, they may be perceived as tactful and diplomatic. 3. Collaborating: Individuals who enjoy negotiations that involve solving tough problems in creative ways. Collaborators are good at using negotiations to understand the concerns and interests of the other parties. They can, however, create problems by transforming simple situations into more complex ones. 4. Competing: Individuals who enjoy negotiations because they present an opportunity to win something. Competitive negotiators have strong instincts for all aspects of negotiating and are often strategic. Because their style can dominate the bargaining process, competitive negotiators often neglect the importance of relationships. 5. Compromising: Individuals who are eager to close the deal by doing what is fair and equal for all parties involved in the negotiation. Compromisers can be useful when there is limited time to complete the deal; however, compromisers often unnecessarily rush the negotiation process and make concessions too quickly.

7 The Edward St. John Real Estate Program has been a leader in real estate education for a quarter-century. The interdisciplinary course of study available in the MS in Real Estate and Infrastructure provides a comprehensive approach to succeeding in one of the most complex but rewarding industries in the world. Here, you ll master multiple areas of study including development, sustainability, finance, investments, and market feasibility. Available as a full- or part-time option, the MS in Real Estate and Infrastructure is taught by professors and practitioners from the region s leading investment, development, law, architectural, engineering, and planning firms. Students have exclusive access to a network of experts and influencers people who are helping to reshape the industry and ensure its success for generations to come. Full Time: The 36-credit full-time MS in Real Estate and Infrastructure is offered at the Carey Business School s Washington, D.C., campus near Dupont Circle. It s designed for individuals with up to three years of professional work experience. Students complete the program in a cohort format, with a group of peers following the same curriculum for most of their studies. Students will also take part in a unique special topics course, designed to encourage interaction with the professional community during meetings, field trips, and site visits. During the summer the final leg of their coursework students will take part in an internship and practicum experience. This is a unique opportunity to gain hands-on work experience with a company in a specific area of interest. The internships are structured and supervised by Johns Hopkins faculty with a professional mentor, and students must successfully complete their internship to graduate. Part Time: The 36-credit part-time MS in Real Estate and Infrastructure is now being offered for start terms Spring and Fall in both the DC and Harbor East locations. It s designed for individuals with three or more years of professional work experience. Your coursework will culminate in an individual practicum or thesis, challenging you to integrate classroom knowledge with hands-on experience, under the direction of a real estate professional and faculty member. You will complete a comprehensive final project related to your chosen specialization, applying your skills and knowledge directly to create a development proposal or a research thesis. If you have additional questions, don t hesitate to visit the website at or contact us at or carey.admissions@jhu.edu.