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• Case | HBS Case Collection | March 2017 (Revised March 2019)

  Mubadala and EBX: To X or to X It?

  Nori Gerardo Lietz, Ricardo Andrade and Sayiddah Fatima McCree

  In April 2012, Mubadala, Abu Dhabi's sovereign wealth fund invested $2 billion in Brazilian conglomerate EBX, believing the company to be undervalued by the public markets. Shortly thereafter, however, EBX and its multiple business lines began to spiral downward. Hani Barhoush and Oscar Fahlgren, members of Mubadala's investment team, were now charged with leading the restructuring efforts on behalf of Mubadala. The situation was exceptionally complex and involved dealing with different creditors, untangling cross-collateral clauses from EBX’s subsidiaries’ loans, and foreclosing on personal guarantees from Batista. There were also strong political challenges, since most companies operated in tightly regulated markets, some were publicly-traded, and many had received substantial subsidized financing from Brazil’s Development Bank (BNDES). Finally, the country’s economic and political environments were rapidly deteriorating, with a combination of stagflation, rising interest rates, and successive popular demonstrations causing the gradual loss of governability and ultimate impeachment of President Dilma Vana Rousseff.

  Keywords: sovereign wealth funds; conglomerates; Investing; corporate structure; International; restructuring; Sovereign Finance; Business Conglomerates; Investment; Financing and Loans; Restructuring; Organizational Structure; Economy; Brazil; Abu Dhabi;

  Citation:

  Lietz, Nori Gerardo, Ricardo Andrade, and Sayiddah Fatima McCree. "Mubadala and EBX: To X or to X It?" Harvard Business School Case 217-065, March 2017. (Revised March 2019.)  View Details

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• Case | HBS Case Collection | February 2018 (Revised February 2019)

  The Tax Man: Taxes in Private Equity Real Estate

  Nori Gerardo Lietz, Timothy J. Becker, Ricardo Andrade and Sayiddah F. McCree

  In January 2018, Caelan Langan, an associate at KSW Partners LLC (“KSW”), was asked by Katherine Scott, the partner for whom he worked, to recommend a proposed structure to acquire a prominent office building in San Francisco for their most recent fund. Caelan was asked to review potential acquisition structures that would minimize the impact of taxes on their investors’ returns. The assignment was complicated as KSW had different categories of investors (a sovereign wealth fund, pension funds and high net worth individuals) each of which had different tax considerations. The differing interests created significant potential conflicts in terms of how to manage the investment and when to sell the building, as the economic consequences to each category of investor were not the same. Even the economic interests of KSW were not completely aligned with their investors. The case outlines the alternative investment structures that could be considered: REITs, Limited Partnerships, C Corporations, and combinations of those entities. The case illustrates how to manage the potential conflicts and the important consequences of tax policy on how investments are structured. Students are asked to model the results of alternative investment structures and determine what Caelan’s recommendation should be.

  Keywords: real estate; alternative investment structures; Property; Acquisition; Private Equity; Investment; Management; Taxation; Policy;

  Citation:

  Lietz, Nori Gerardo, Timothy J. Becker, Ricardo Andrade, and Sayiddah F. McCree. "The Tax Man: Taxes in Private Equity Real Estate." Harvard Business School Case 218-077, February 2018. (Revised February 2019.)  View Details

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• Case | HBS Case Collection | August 2018 (Revised November 2018)

  Brooklyn Lodgers: 78 South Third St., Brooklyn, NY

  Charles F. Wu, Jackie Bereiter and Signe Conway

  Nathalie Parizat and her husband Hugo were contemplating a new real estate investment. For two years they had been frustrated by and lamenting their situation of paying high rents to third parties while the couple had idle cash in the bank. They also were convinced that Brooklyn's rising rents and property prices were showing no signs of abating. The couple had $100,000 in savings, which they intended to combine with mortgage financing to purchase a residential income-producing building. Nathalie focused her search on Brooklyn, narrowing it down to Williamsburg, where she thought there was better potential to make a good return on their investment. She had quit her full-time job and was planning on managing the building and the renovation – should it be needed – herself. Was she ready to take on this challenge or was she in over her head?

  Keywords: real estate development; Property; Investment; Management; New York (city, NY); Brooklyn;

  Citation:

  Wu, Charles F., Jackie Bereiter, and Signe Conway. "Brooklyn Lodgers: 78 South Third St., Brooklyn, NY." Harvard Business School Case 219-022, August 2018. (Revised November 2018.)  View Details

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