David Todd | Vice President, US Retail Investments | Prudential Real Estate Investors

David Todd oversees US retail investments for Prudential Real Estate Investors.  Formerly he was with DDR Corp. (NYSE: DDR), and is an REFM training alum.

How did you get started in the business?

Actually, by cold calling.  Out of undergrad I worked for a consulting firm, but got the real estate bug working on a small side project.  The more I think about it, I probably had the bug a long time ago as my dad is an architecture buff so I spent the better part of my childhood looking at, and discussing, buildings with him.  However, this little deal helped me realize the potential financial benefits, so I guess the merger of a hobby and, um, greed?  At any rate, I was hooked but didn’t have an obvious entry point into the business so would call people I saw in the paper that were working on interesting projects and ask for an informational interview – that type of thing.  After many many calls and meetings I ended up landing a great development gig with Gary Rappaport’s shop in DC.  Took me over a year.

What do you love the most about it?

The tangible nature.  The fact that what we do, hopefully well, impacts the daily lives of so many people for a long time. The convergence of multiple variables, be it employment growth, demographic changes, shopping trends – whatever – and how those factor into investment decisions.  I also appreciate the measurable nature of the business.  By that I mean you’re going to make a lot of assumptions when you underwrite an asset, and one day you’ll sell the building and see how you did.  This isn’t exclusive to real estate, but perhaps a little easier to comprehend.

What projects are you working on right now? 

My main job is to do retail real estate acquisitions, for all types of investment strategies, across the US.  Considering where we are in the cycle it’s busy out there.  We just finished a few large core buys, where we love the real estate and the future of the assets.  Also we are working on a couple infill developments that will be fantastic when complete, and what a ride to the finish.

What’s the most challenging thing about your job?

Time management for sure.  You have to look at so many deals to find a winner and you constantly have to be on the lookout for an edge.  And with the wife, kids, travel…lots of travel, it’s hard to find time for everything.  And more importantly, time to do everything to the level you expect of yourself.

What is your dream project to work on? Why?

I’m definitely drawn to larger deals, so I’ll go with the purchase and overhaul of a substantial portfolio.  The complexity is fascinating.

Any words of wisdom for young folks looking to get started in the business?

Hustle.  The real estate industry is clubby so you’re going to have to work hard and get creative.  Do things like joining a group such as ULI, network your face off, shadow someone for experience – whatever it takes.  And while you didn’t even hint at a plug, so I’m being completely serious here, take some REFM classes and put them on your resume.  That will show passion for the industry and the ability to offer an employer a skill on day one.  Starting out, no one will expect you to forecast rents for them, but they will want you to be able to build a dynamic financial model.  You can utilize that skill to earn your keep while you’re learning the rest through osmosis.  I’m a model snob so this might be more important to me than others, but I suppose my bigger message is you need to be able to offer someone something useful to their own goals, and you need to demonstrate a true desire for the business.

What’s your favorite building? Why?

This is probably the toughest question you asked.  As mentioned earlier I’ve seen a lot and have many found memories – Fallingwater, Burruss Hall, Sagrada Familia, the Hemingway House where I got married, 8 Spruce – but gun to my head, if I had to pick one, I’d go the symbolism route and say the Jefferson Hotel.  Because, well first off, it’s beautiful, but it also reminds me of my hometown Richmond, VA.  Plus, Thomas Jefferson is the man.


3 New Reasons To Log In To Valuate Now

by Bruce Kirsch on April 16, 2015

NOTE: You must first clear your browser cache to enjoy these new features. Here’s how.

1. Easier navigation from Home screen to other input screens using the “see more” icon


2. Third Party Investor Calculator module on the Home screen shows LP returns pro-rata


3. Projection embedding capability* displays a linked teaser analysis on any webpage

* Applies to mid-rise and high-rise subscribers only

NOTE: You must first clear your browser cache to enjoy these new features. Here’s how.

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Question 1. When I make the purchase (i.e., pre-renovation), my property taxes will equal the ad valorem rate x the Purchase Price + the fixed amount of CFDs. However, when I complete my renovation, I will be subject to an additional higher reassessment. How do I model this?

Answer 1. Create a section on the Assumptions tab that includes an input for the assumed post-renovation assessed value dollar amount, and thus when you multiply that by the tax rate, you will have the new annual tax amount.

Also create an input for the month # in which the post-renovation tax re-assessment occurs.

On your Cash Flow projection tab, break out your real estate taxes line into two separate lines:

  • Line 1 will be “RE Taxes – pre-renovation”,
  • Line 2 will be “RE Taxes – post-renovation”.

Use a *IF statement to turn off Line 1 the month of the tax re-assessment.  Do the same for Line 2, such that it does not start until the month after the month of the tax re-assessment Each line will key off of the relevant assessment amount math (i.e., either the pre-renovation assessment, or the post-renovation assessment), growing on a compounded basis at the assumed growth rate from elapsed month 1 onward of their respective calendars.

Question 2.  If I am selling a property in California my NOI reflects the taxes that I am currently paying.   But when a buyer underwrites his purchase price, he will be reducing the projected NOI to take into account the incremental increase in taxes due to the higher property taxes based upon the purchase price. What is the best way to deal with these issues?

Answer 2. You need to have an input for the dollar amount that you assume the next buyer will deduct, then deduct that from the annual NOI that is being used in the capitalization. If you don’t make the deduction amount an input (instead calculating based off of a %), you will start to introduce circular references, and we don’t recommend that.