JKJ Pension Fund Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

JKJ PENSION FUND

1. Un-developed Land

There were three lots under the un-developed land project with the investment of $3,600,000. If the company wanted to hold its investment then it would generate profit as market value is lower than the investment.

2. Wilshire Plaza Garage:

In Wilshire plaza, invested amount was $21,400,000 which had market value of about $10,730,000. Wilshire plaza garage had three parking lots which were generating revenues and risk associated on this project was low. In future, prices were expected to increase; so the decision was made to hold this property.

3. Wilshire Ground Lease:

The property was diversified into three leases, which reduced the risk associated with them as they all were leased and in 11 years their break-even would be achieved. Sarah made the decision to hold this property till the time of maturity of the lease.

4. Riverbank Central Hotel:

The invested amount in hotel was $18,750,000 and its market value was $3,712,102. If the company wanted to sell this property then they would have bear the loss, in order to secure company’s loss Sarah made the decision to hold this property as market prices were showing incremental trends.

5. Riverbank Center Office:

Office property had the market capitalization rate of 9.25% with the invested amount $12,400,000. Its annual return was recorded as $561,013 with expired lease. The decision was made that this property should be sold out because of the expired lease.

6. Empire Hotel Rochester New York:

Empire hotel location was ideal because the competitors were far away from their respective market. Empire hotel was the only hotel, which covered the resort market of Buffalo, Syracuse, Niagara Falls, and the Finger Lakes. Decision was made to hold the property because of the central point of these resorts.

7. Maple Apartments:

This property was sold because customers were attracted towards newly renovated and furnished apartments and Maple Apartments were showing their damages as they were the oldest apartments in the city. Although the market value was lower than the invested amount but it would have incurred even more expenses to renovate this property.

8. Midtown Mall:

This property was attractive in terms of revenues and the scarcity of lands in Boston. The mall was easily accessible and it also provided accessibility to all the well-known branded products to customers. Transportation services were available in the mall area that made the Midtown Mall more attractive for customers to shop. Decision was made to hold this property because its market value was lower than the amount of investment made on it.

9. Alpha Center:

Sarah wanted to hold this property in her portfolio because it only incurred the cost of management of the center. Its net operating income was higher than the expenses. The decision to hold this property was also made on the basis of its market value as it was lesser than the investment made into this property.

10. Pathmark Supermarket:

This property was located in the business zone where banks, retail service businesses, movie theaters and restaurants were located. These business entities rented the rooms and services from the Pathmark, which were the main resources of income of this property. Sarah held this property in her portfolio........................

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JKJ pension fund currently has $ 187 million invested in 14 properties. Sarah Griffin, managing real estate portfolio, it is necessary to appreciate each of the properties and recommend which ones should be sold and which to keep. In addition, it should recommend guidelines for new investment and the corresponding portfolio of the largest pension funds. "Hide
by William J. Poorvu, John H. Vogel Jr. Source: Harvard Business School 24 pages. Publication Date: December 21, 1994. Prod. #: 395133-PDF-ENG