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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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• Case | HBS Case Collection | May 2018 (Revised October 2018)

  Argentina Power – Don't Cry for Me Argentina

  Nori Gerardo Lietz and Sayiddah Fatima McCree

  In 2016, Bruce Wayne, Managing Director of Energy Finance Corporation (“EFC”), was refining the Investment/Credit Committee materials for the development of up to 10 power generating plants in Argentina. As a subsidiary of the much larger International Conglomerate Corporation (“ICC”), EFC had to convince ICC’s Investment/Credit Committee to provide capital despite the many risks associated with investing in Argentina.
  Due to Argentina’s vast energy resources, its modern political history has been deeply intertwined with its “energy” history. In its many military coups and political uprisings, typically each government used artificially low energy prices to keep the population subdued and the revenues from YPF to finance these subsidies or worse to line their pockets. Many of the interventionist measures that Argentina's governments imposed on the energy sector, such as price controls and at the most extreme nationalization, made it nearly impossible for private sector energy players to succeed or for the public sector to invest in its development.
  After severe blackouts in the summer of 2014, many Argentines in the country's most populous cities were outraged and went to the streets in protest. These blackouts were specifically due to the increased power usage for air conditioning in the summer months but were more generally caused by the removal of subsidies for power companies and a dearth of public and private infrastructure investment. Into this environment, President Macri was elected and he made energy reform one of the key pillars of his administration. Furthermore, he invited the private sector back into Argentina to immediately alleviate its power generation deficiencies.
  In this case, the students will examine the ways in which Bruce Wayne and his team may structure and diligence this electric power infrastructure deal. Particularly, the students should come to understand how the deal structure could allow EFC to both gain the most benefit but also shift the risks away from their company. Key questions that will be explored include: What makes investing in infrastructure particularly risky? Can private investment close the world’s infrastructure gap? Can political risk be mitigated?

  Keywords: cross border; energy markets; Infrastructure finance; Infrastructure development; Business Subsidiaries; Business Cycles; Macroeconomics; Energy Generation; International Finance; Project Finance; Government and Politics; Demand and Consumers; Infrastructure; Utilities Industry; Energy Industry; Latin America;

  Citation:

  Lietz, Nori Gerardo, and Sayiddah Fatima McCree. "Argentina Power – Don't Cry for Me Argentina." Harvard Business School Case 218-041, May 2018. (Revised October 2018.)  View Details

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

  National Storage Affiliates: The REIT IPO Decision

  Charles F. Wu, Max de la Bruyére and Gregory D. Himmel

  In 2015, two years after founding National Storage Affiliates (NSA), Arlen Nordhagen and Tamara Fischer had an important decision to make. Should they proceed with NSA’s IPO? Although they had targeted to receive $15-17 a share, it was now apparent that the figure was unlikely to be more than $13. Applying a novel solution to bringing private operators together, NSA had so far acquired or contracted 246 properties across the USA. NSA would bring in private operators (PROs) by offering equity in the total company and allowing them to keep most operational control. To increase the pace of growth and be able to compete with the public self-storage companies, NSA needed to raise more capital, hence the IPO. However, potential investors saw some problems with the business model and were unwilling to pay the envisioned target price per share. They identified three options going forward: proceed with the IPO at $13, remain private, or unwind the companies, letting the PROs regain individual ownership of the properties. What should they do?

  Keywords: real estate industry; Initial Public Offering; Problems and Challenges; Decision Making; Real Estate Industry;

  Citation:

  Wu, Charles F., Max de la Bruyére, and Gregory D. Himmel. "National Storage Affiliates: The REIT IPO Decision." Harvard Business School Case 219-026, August 2018. (Revised September 2018.)  View Details

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