Developing a Broader Vision of Real Estate
In his role as head of real estate for Banco Itaú BBA in Brazil, Miltom Carvalho is responsible for the origination and structuring of loan financing for a broad range of commercial projects. So it's important for him to have a broad view of the industry. With the goal of better understanding how the diverse segments of the industry function and interact, he attended the Real Estate Management Program at Harvard Business School (HBS) Executive Education. He discusses his experience and the impact it has had on his organization.
What are the biggest challenges facing your field or organization today?
The real estate sector is going through a particularly difficult phase in Brazil, with declining asset prices and uncertainty surrounding regulatory and legal requirements. We are discussing debt restructuring with major companies in the industry, and we need to be creative and innovative to get through the crisis we are facing. In this program, we analyzed cases that focused on distressed assets and investment partnerships. A structure that's similar to real estate investment trusts (REIT) in the U.S. can be an important solution for the development of projects and subsequent sale to investors with a more income-oriented profile, and the program introduced me to several colleagues who were willing to study these structures as emerging market investors. This program also featured cases related to affordable housing, which is a very promising segment in my country given the housing deficit and the dependence on public policy and subsidies. Additionally, the program's examination of Public-Private Partnerships, private equity, and REITs were very interesting and will be valuable for my team and the organization.
Why did you choose to apply to this program?
In my current position, it is important to see how the various segments of the real estate market work. To make decisions, I must be able to understand business from a real estate developer's perspective. This program's content ranges from the discussion of real estate asset valuation to aspects of leadership, design, technology, and project bids. I knew that it would give me the opportunity to interact with key industry executives and, through practical cases, discuss solutions to diverse challenges around the world.
What surprised you most about the on-campus learning experience?
The living groups and the daily discussions with other participants were the two most fascinating aspects of the program. In the early morning discussion-group meetings, we exchanged our own unique perspectives on the case studies, and throughout the day we had the chance to clarify our points of view. Residing together on campus and meeting in our living groups enabled much greater communication among participants. The program's practical vision of methodology, case analysis, and solutions made our routine very pleasant and profitable. Also, lunch and dinner gatherings with my colleagues created an informal atmosphere, allowing us to exchange professional experiences.
How did the faculty and your fellow participants contribute to the learning experience?
Our group consisted of senior executives from several countries. So I was able to learn with, and from, established bank colleagues and developers representing diverse real estate projects—home buildings, malls, hotels, and more. My peers in the program were quite experienced and knowledgeable, and that enhanced the interaction inside and outside the classroom. Their commitment and participation played a significant role in the learning process and provided me with broader knowledge and a diverse vision of the sector.
How are you integrating what you learned into your day-to-day work?
Everything I learned—from the most basic concepts of asset valuation to the discussions of investment structures and trading of stressed assets—is applicable to my job. As a bank executive, I have a better understanding of the bid process and the main variables that should be taken into account in real estate development. I have a broader perspective that certainly leads to my making more thorough and effective decisions regarding potential risk. I now have a stronger technical vision, which will bring important contributions to my career and to my organization.