The Trouble with Lenders Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Problems in Real Estate:

Stanley Cirano is the General Partner of the two-separate real estates located at different areas from each other, are now considering reevaluation of both properties due to the economic downturn and financial crises of 2007-2008 and due to the lowest interest rates compared to the previous year, when he took debt to finance these two properties. (Ivashina, 2009)

The first property is Brookline Road Shopping Centre, which was acquired by Stanley Cirano in 2006 and greatly managed through the financial crises and economic downturn of 2007-2008 by him. The performance of this property is well, that is why Stanley Ciranohas wondered either to refinance it or sell it. Currently it is financed through 35% of equity and 65% of debt.(Furfine, Generalized Experience, 2016)

Second one is Columbus Festival Plaza, which was acquired in 2010 by Stanley Cirano in a bankruptcy auction bywinning the bid when his bid was the lowest bid among all bids. This property is also providing the good growth in Net Operating Income while requiring the large amount of capital improvements since its acquisition. It is financed through 55% of debt and 45% of equity.

These two properties have some similarities but also in contrast have some differences. Similarities include the nature of the property, both are the commercial real estate properties,

Providing the good growth in operating income. Differences include the specifications of theproperties, both have the different interest rates, DSCR ratio, maturity period, Amortization period, initial investment, payments, acquisition period and much more. For both the properties, Stanley Cirano has chosen the most attractive financing option according to the time of purchase, whichwas financing through debt which provides the lowest finance cost (interest cost) for investing in commercial real estate properties.(David H. Erkens, 2012)

The Trouble with Lenders Harvard Case Solution & Analysis

The main problem needed to be consider is that either Stanley should refinance in both the securities and should wait till the commercial real estate value goes up or sell them and invest in other projects which will provide him more return than them.(Furfine, 2016)

However, the final recommendations will be given after analyzing all the alternatives for both the properties to go with either to refinance or sell.

Alternatives for both the properties will be discussed below one by one with the final recommendation for both the properties, either to refinance or sell, if refinance then what option is suitable, where to go or leave.

Brookline Road Shopping Centre & its Alternatives:

Brookline Road Shopping Centre is based on the 65,611 Sq. foot size, purchased in 2006 by Stanley Cirano. Now he is confused either to sell or refinance it, for refinancing he has three alternatives either to renew the loan with new specifications from Skyline Bank or take new loan from Fourth Second Bank or Regional Liberty Bank.

For evaluation, we took average of three similar nature properties like Brookline Road Shopping Center to find the current market value of Brookline Road Shopping Centre.