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  • January 1999 (Revised March 2004)
  • Case
  • HBS Case Collection

AMB Consolidation, The

By: William J. Poorvu and Daniel J. Rudd
  • Format:Print
  • | Pages:25
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Abstract

Anne Shea, assistant vice president at the Curators' Fund (The Fund), is responsible for investing roughly $80 million in real-estate assets. Less than three years ago, Anne invested $40 million into a commingled fund run by AMB Institutional Realty Advisors, Inc., a leading pension fund advisor and asset manager. She had been pleased with The Fund's relationship with AMB; investing with AMB provided a cost-effective, value-added means for The Fund to directly own property. Recently, AMB proposed to consolidate all the properties under its management into a REIT and to take the new REIT public. Anne faces a decision: consent to the roll-up by exchanging her shares in the commingled fund for shares in the REIT, or sever ties with AMB by liquidating her position in the commingled fund at a price equal to the fair market value of the assets before the roll-up and public offering. In addition to the focus on REITs, qualitative issues in the case include the prevalence of conflicts-of-interest in most aspects of the highly fragmented real estate industry. The mechanics of a consolidation, the valuation of a management business, and the concept of "franchise value" are also addressed.

Keywords

Private Ownership; Conflict of Interests; Industry Structures; Property; Investment; Public Ownership; Real Estate Industry

Citation

Poorvu, William J., and Daniel J. Rudd. "AMB Consolidation, The." Harvard Business School Case 899-144, January 1999. (Revised March 2004.)
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About The Author

William J. Poorvu

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    • Faculty Research

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