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Pilgrim Case Essay

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TO: Professor Simon FROM: DATE: May 19th, 2014 OBJECT: Equity Contribution for Pilgrim Assurance Building On behalf of David Bailey, there have been individuals looking into the property located at 795 Atlantic Avenue. As an investor, Bailey is interested in making an offer on the property however he is trying to make his offer look more attractive than the competitors. With thorough research, he has found ways that would improve the building and in turn generate a larger yearly cash flow while still being able to improve the building. Bailey was also considering converting the current office space building into condominium units but that was strictly dependent on the revenue that could be generated from doing so. …show more content…

III. POSSIBLE SOLUTIONS If Bailey were to outbid the competitors and successfully purchase the building there are a variety of options that Bailey could engage in in order to improve the building. The first option would be to keep Pilgrim as a tenant in the building. By doing this he would secure 100,000 square feet of space at $26 /sq. ft generating about $2,600,000 in rental income just from Pilgrim. Also with keeping the space as office space, Bailey found that he would be able to fill in two out of the four floors of the atrium adding an additional 10,000 in rentable square footage. This was something that none of the other competitors had noticed. Bailey also noticed that he would be able to renovate all 20 bathrooms within the building but that his renovation would be about 15,000 cheaper than his competitors. Continuing with the renovations, Bailey saw that the atrium would need to be upgraded and instead of it costing him around $200,000, which would be the cost to his competitors, he had the ability to save $50,000 by reusing the marble in the bathrooms as the floor and walls of the atrium. Taking into consideration all of the upgrades and renovations, as well as the fact that Bailey would be able to manage the building at 0.50/ sq ft compared to his competitors which were managing at $1.25/ sq ft, the value at which Bailey would place on keeping the building an office space would be $3,433,649.13 (see

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