Woodmere Properties, Inc. Harvard Case Solution & Analysis

Woodmere Properties, Inc. Case Solution

Decision related to stock purchase or sell

The case illustrates the opportunity for the real estate business to acquire the RIET, as the outcome of that acquisition would increase the profitability size as well as willing to give high dividend rates to the existing as well as the potential shareholders. Nina Zanger was one of the new shareholders who could avail such opportunity in order to secure the fixed income coming from it, she was trying to evaluate the current stock price, the potential benefit for selling the share in order to acquire Lanier realty trust and the expected benefit to buy the combined share through Woodmere properties. On the other hand,there are various benefits to transfer or hold the particular shares offered in the real estate business.

First of all, if Woodmere would not sell the shares, then it might have no negative impact on the company’s performance because the historical performance was quite achievable for the company to generate enough income from rents, lease or other sources. However, Woodmere sold the shares for acquiring Lanier realty trust because it had a successful achievements in the acquisition of the firms, which allowed them to increase the operational size as well as attracted the investors for the future consideration. The benefits from the salewould provide enough amount to purchase the entity which it wanted to acquire therefore,excluding the hold of shares, this deal could increase the company’s reputation whichwould createpositive image to its existing as well as the potential shareholders.

However, the buying of shares from the investors would benefit in terms of discounted shares value and the potential to receive high yields from the business. Therefore,according to the analyst’s point of view, the investor might have the opportunity to invest in the shares of Woodmere in order to receive the desired profit margins. So all the situations related to both the company and the investors would benefits each other. But it should be decided that the company must acquire the business through the amount receive from the sale of shares.

Assessment of stock

Competitive Advantage

The history reveals the declining rate of real estate business and shows that the value of the companies will drop to 30-40% in the coming years. However, the condition of Woodmere was opposed to it and shows that it had an average growth rate in the industry level. So according to the analyst, the business might benefit by converting from the small size real estate firm into the large public company.

Woodmere was successful in the level of acquisition in the last decade, which shows that it had a competitive advantage because many of the large firms declined their value and un-profitable in acquisition. According to the analyst’s view, it might benefit both the investors and the company if the acquisition of Lanier would take place. This would allow to build a better position in the market as compared to other market giants.

Focused business strategy

The five strategic points of the business clearly illustrates that the Woodmere could increase the level of stock in order to meet the criteria mentioned in the Business strategy evaluation of the company. However with the slow growth, Woodmere may not achieve the target and thus, subject to generate the modest earrings, which might not allow the company to increase its value and for the investors. This process would hinder all the points given in the portion of business strategy of the company.

 Current verses future return

Before acquisition, Woodmere had the net income ratio of 29% from the revenues and contributed to the shareholders. However, the situation under the acquisition of Lanier is quite different and shows that it reduced the level of earnings by 4%....................

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