The development, proposed by the team under the name “Kachel Coris Partners,” transforms the historic Walter Reed Medical Center’s Building 1 into a 528-unit continued care retirement community, as well as adjacent sites as mixed-used new builds with 50,000 square feet of general retail, 95,000 square feet of life sciences lab space, 20,000 square feet of co-working office space, a 93-key extended-space hotel, and 15,000 square feet of food and beverage retail. “Our development proposal is integrated with the community of the greater, 66.5-acre master-planned development, the Parks at Walter Reed, led by Hines. Neighboring institutions, such as the new Department of State Foreign Mission Center campus and the Children’s National Medical Center, also influenced our programming to serve those users and the opportunity they will bring to the neighborhood,” said Katy Lepeturin ’25.
The proposal aims to bring new life to Building 1 and continue its historic mission as a center for health and wellness, while also serving the increasing aging population in Washington, D.C. The ground floors in Building 1 and the new buildings will bring retail along one of the main thoroughfares of the development, including a pharmacy and food and beverage retail to serve residents and workers. Additionally, the new buildings will include life science lab space to serve as a scale-up facility for a neighboring life sciences incubator program sponsored by a multinational pharmaceutical company, co-working space designed for senior white-collar workers living nearby or visiting, and an extended-stay hotel for traveling professionals and visitors to the senior living community.
“The goal was to be driven by market demand and community needs with the project’s programming, while also balancing the restrictions associated with redevelopment of a historic, landmarked building and financial feasibility,” Rachel Lee ’25 explained. The proposed programming delivers community benefits while also achieving competitive financial returns. The team performed detailed due diligence and market analysis on development costs, renovations of historic buildings, and income and operating expenses to project the pro-forma cash flows of the project.
Chris Byrns ’25 shared, “The more challenging aspect of the proposal was optimizing and modeling across the programming mix, while adequately addressing expected parking needs with our development and the greater master- planned development.” The team’s proposed capital stack included creative uses of debt, Historic Tax Credits, and an Opportunity Zone Fund investor to boost the financial returns to equity investors. “We took advantage of the Historic Tax Credits associated with the landmarked Building 1 to finance its redevelopment and the Opportunity Zone designation as sources of funding, which were accretive to our deal-level returns even after accounting for the required hold period for Opportunity Zone Fund investments,” he added.
"The proposed programming delivers community benefits while also achieving competitive financial returns."
The case competition, with judges from prominent U.S. real estate companies, was a prime opportunity for the team to put theory into practice. The team members navigated the full cycle of a real estate investment from market analysis, forecasting cash flows, evaluating exit strategies, and presenting to judges akin to an investment committee. The real estate industry is still navigating secular changes with remote work, retail and hospitality, and the proposal shows the possibility to thoughtfully develop various asset classes while simultaneously delivering positive returns to investors.
The team was selected by the Real Estate Association, and the Office of Student Affairs and Paul Milstein Center for Real Estate supported the students’ travel to the competition. Judges from prominent U.S. real estate companies as well as Hines determined the placements. The team was awarded $15,000 for its first-place finish. Hosted by the Leonard W. Wood Center for Real Estate Development at Kenan-Flagler Business School and presented by Hines, the UNC Real Estate Development Challenge invites 16 teams from the United States’s top MBA programs to compete. This annual event is the first business school case competition to focus solely on real estate development.