Case | HBS Case Collection | June 2009 (Revised May 2020)

Busse Place

by Arthur I Segel, William J. Poorvu, Richard Kessler, Justin Seth Ginsburgh and Eric Fleiss

Abstract

Busse Corporate Center's largest tenant recently declared bankruptcy, leaving the building 38% occupied and significantly overleveraged. In a depressed suburban Chicago office market, Hannah Sanchez, the leasing agent, has to negotiate lease proposals with three prospective tenants to try to fill the vacant space. Meanwhile, the building's owner, Collins Properties, must decide with its equity partner whether to continue funding the building's losses while trying to lease the vacant space, restructure the debt, or default on the loan and turn the building over to its lenders. The decision is made more complicated by Collins' use of a Commercial Mortgage Backed Security (CMBS) Loan, which involves multiple parties, ambiguous relationships, and bifurcated responsibilities.

Keywords: Buildings and Facilities; Restructuring; Borrowing and Debt; Financial Management; Mortgages; Investment; Leasing; Property; Real Estate Industry; Chicago;

Language: English Format: Print 25 pages EducatorsPurchase

Citation:

Segel, Arthur I., William J. Poorvu, Richard Kessler, Justin Seth Ginsburgh, and Eric Fleiss. "Busse Place." Harvard Business School Case 209-154, June 2009. (Revised May 2020.)

Related Work

  1. Supplement | HBS Case Collection | June 2014 (Revised May 2020)

    Busse Place (B): Hannah's Dilemma

    Arthur I. Segel and John H. Vogel, Jr.

    Marisa Sanchez, a new Associate at Douglas Private Equity Advisors, confronts a dilemma when she is asked by a Senior Vice President (SVP) to do due diligence on a deal he wants to bring before the investment committee which will include the SVP, Douglas' owner and founder and others. The meeting is timed just before annual bonus season. Marisa's due diligence findings indicate that her boss, the SVP, has significantly misrepresented the market information and that the pricing should be considerably less than he is advocating. He asks her to manipulate the numbers, "to make the numbers work." She has to decide, when asked at the committee meeting, what to say and how.

    Keywords: real estate; financial analysis; Property; Finance; Analysis; Ethics; Real Estate Industry; United States;

    Citation:

    Segel, Arthur I., and John H. Vogel, Jr. "Busse Place (B): Hannah's Dilemma." Harvard Business School Supplement 214-104, June 2014. (Revised May 2020.)  View Details
    CiteView DetailsPurchase Related

  2. Case | HBS Case Collection | June 2009 (Revised May 2020)

    Busse Place

    Arthur I Segel, William J. Poorvu, Richard Kessler, Justin Seth Ginsburgh and Eric Fleiss

    Busse Corporate Center's largest tenant recently declared bankruptcy, leaving the building 38% occupied and significantly overleveraged. In a depressed suburban Chicago office market, Hannah Sanchez, the leasing agent, has to negotiate lease proposals with three prospective tenants to try to fill the vacant space. Meanwhile, the building's owner, Collins Properties, must decide with its equity partner whether to continue funding the building's losses while trying to lease the vacant space, restructure the debt, or default on the loan and turn the building over to its lenders. The decision is made more complicated by Collins' use of a Commercial Mortgage Backed Security (CMBS) Loan, which involves multiple parties, ambiguous relationships, and bifurcated responsibilities.

    Keywords: Buildings and Facilities; Restructuring; Borrowing and Debt; Financial Management; Mortgages; Investment; Leasing; Property; Real Estate Industry; Chicago;

    Citation:

    Segel, Arthur I., William J. Poorvu, Richard Kessler, Justin Seth Ginsburgh, and Eric Fleiss. "Busse Place." Harvard Business School Case 209-154, June 2009. (Revised May 2020.)  View Details
    CiteView DetailsEducatorsPurchase Related

About the Authors

Photo
Arthur I Segel
Baker Foundation Professor of Management Practice, Poorvu Family Professor of Management Practice, Retired
Finance
Entrepreneurial Management

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William J. Poorvu
MBA Class of 1961 Adjunct Professor in Entrepreneurship, Emeritus

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