Hemisphere Development LLC Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Hemisphere Development LLC Case Solution

Introduction

The CEO and founder of Hemisphere Development Todd Davis along with the team of Duke Realty had visited the site of the Delphi Automotive plant in 2009 located in Columbus, Ohio which was near to be filed for bankruptcy as a result of a rapid decline in the automotive industry, depressed real estate market and environmental damages caused by the manufacturing activities of the company. The contaminated brownfield is considered to be an opportunity for the redevelopment company.

An opportunity was presented to Davis from Penn National Gaming. The gaming company is considering using the site of Delphi Automotive to build its two casinos as community stakeholders’ are not agreed to build the casinos at its initially intended site in downtown Columbus. The gaming company considered contracting with the Duke-Hemisphere only when the environmental risks associated with the project would be transferred to the redevelopers.

At this point, Davis assessed this impending deal and apprehend certain situations including the structuring of this development partnership, financing the project, potential investment he would be willing to create for the project, and the expected returns he would require to move with the project. To put it briefly, Davis wishes to identify the potential viability of this development project to make this huge investment.

Problem Statement

The development company Hemisphere Development is considering the offer from the Penn National Gaming of redeveloping the contaminated site of Delphi Automotive for the construction of the two casinos. The CEO, Todd Davis has raised some forthcoming questions regarding the project's feasibility that in what way the project should be structured? What would be the financing resource? What would be the amount of investment he would be willing to make? And what would be the returns he requires to move forward with the project?

Situational Analysis

Hemisphere Development‘s Core Competencies

Hemisphere Development's core competence as a firm is in the redevelopment of contaminated or underutilized properties, commonly known as brownfield sites, into viable commercial or industrial properties. The company has a deep understanding of the complex regulatory and environmental issues involved in the redevelopment process, including securing necessary permits, managing environmental cleanup efforts, and navigating complex legal and political landscapes. Hemisphere Development also has expertise in project management, financial analysis, and risk management, which are all critical components of successful brownfield redevelopment projects.

Investment Strategy

Hemisphere Development's investment strategy appears to focus on identifying undervalued brownfield properties that can be redeveloped and sold for a profit. The company's approach involves conducting thorough due diligence on each property to identify potential environmental risks and remediation costs, as well as assessing the market demand and regulatory requirements for the site. Once a property has been acquired, Hemisphere works to secure the necessary approvals and permits for redevelopment, and then partners with other firms to design and build the project.

Hemisphere's investment strategy also appears to include leveraging government programs and incentives to reduce the costs of environmental remediation and infrastructure development. For example, the company has applied for state grant funds to help offset the costs of environmental cleanup at the Delphi site. This approach allows Hemisphere to minimize its capital investment in the project and increase its potential returns.

Pros and Cons of the Potential Project

The potential project for Hemisphere Development is the redevelopment of the Delphi site, a contaminated brownfield site in Columbus, Ohio, into a mixed-use development that includes residential, commercial, and entertainment spaces.

Pros

Economic Upside: The project has the potential to generate significant economic benefits for Hemisphere Development, with a total contract value of $33 million.

Revitalization of a Contaminated Site: The project would transform a contaminated site into a productive and beneficial space for the community, which would have positive environmental and social impacts.

Diversification of Investment Portfolio: The project provides Hemisphere Development with an opportunity to diversify its investment portfolio and gain expertise in a new area.

Job Creation: The project has the potential to create jobs for the local community..............

Hemisphere Development LLC Case Solution