Holt Lunsford Commercial Harvard Case Solution & Analysis

Compensated of the Proposed Options

Moreover, Lunsford will be compensated with a sum of $178,340 in case of lease renewal with Welch Center facility, $102,827/- in case of acquisition of the building by Staton and disposal of building by Welch; owner and in case of construction of build-to-suit facility Holt will get a compensation on construction transaction, an amount equal to $160,996/- and an additional amount for the lease agreement between Staton and the institutional investor for the compensation of $201,245/-.

Key Characteristics of Industrial Properties

However, the industrial properties have the characteristics of generating hybrid return, one part of the returns would be in the form of lease rentals and interest payments, meanwhile, the other part is capital appreciation in the value of industrial properties. Additionally, industrial properties require effective management of the properties so that they are maintained and the maximum possible capacity has been filled in order to generate steady revenue streams from these industrial properties. Moreover, since the industrial buildings are constructed to provide the facilities for a large number of commercial activities, the building value is significantly higher and the transaction cost for the acquisition of building an industrial property involves high transaction cost.

Further, investment in industrial properties is a kind of defensive investment, since the construction cycle of an industrial building is short, hence, the constructor of industrial building can complete the construction of industrial building during the recession period at a substantially lower cost and then use the property when the recession period is over and the demand of office capacities has begun to increase. In addition to this, the significant value of property leads to the lower liquidity of the property which are not easily saleable in a short period of time.

Future Direction Considering the Nature of the Real Estate Services Industry and the Organizational Capabilities of HLC

Since the nature of real estate services is such that it offers a full range of property related services such as brokerage service, property development, management of lease accounts and other property management related services. However, Holt Lunsford Commercial currently generates revenues from property management, leasing, acquisition and disposal of properties, development and construction of properties, tenant representation services and other property related services, hence, the revenue generation capabilities of Holt shows that Holt Lunsford Commercial is capable of offering a wide range of property related services. Further, the marketing representatives of Holt Lunsford Commercial were well trained and qualified MBAs, meanwhile, marketing representatives were asked to meet the potential clients instead of emailing them, which shows the capabilities of its marketing team.

Further, the main clients of Holt Lunsford Commercial are institutional client and the nature of the real estate service industry shows the increasing trend of institutionalization and institutional investors were more attractive to invest in real estate opportunity, hence, Holt Lunsford Commercial is capable of providing real estate service to institutional investors because it has already been providing service to a number of institutional investors. However, Lunsford should further expand its business operations through merging with other real estate businesses, because it is a commonly used practice in the real estate industry to increase the size of revenues may be through the synergy effect as a result of the merger, therefore, Lunsford should expand its operations through mergers and consolidations. Meanwhile, the service portfolio should be increased and Holt should step into the equation of lucrative properties in order to generate high returns in comparison to the associated risks.....................................

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