Provides real estate market rent data for the analysis from an office or buy decision. Demonstrates that as the “leasing puzzle” known – the answer is simply that the two forms of financing are not cost equivalent in the presence of capital market imperfections, although both forms as a credit. Examines asset-specificity arguments to the view that, in general, a company should not have an office, if it is dictated by its core business support. Presents two opposing anecdotes illustrate why t … Read more »

Provides real estate market rent data for the analysis from an office or buy decision. Demonstrates that as the “leasing puzzle” known – the answer is simply that the two forms of financing are not cost equivalent in the presence of capital market imperfections, although both forms as a credit. Examines asset-specificity arguments to the view that, in general, a company should not have an office, if it is dictated by its core business support. Presented to illustrate two opposing anecdotes why retailers should not take the opportunity to capitalize on a vibrant real estate market. The argument is that shareholders do not need commercial enterprises to invest in real estate because they can do this through their own investment portfolio activities. Also examines issues such as the rights of shareholders and accounting and tax implications. Analysis provides sufficient material for debate.
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from
Frederik Pretorius,
Mary Ho
Source: University of Hong Kong
12 pages.
Publication Date: Feb 10, 2003. Prod #: HKU253-PDF-ENG
Real Estate and Capital Structure Decisions – Lease Versus Buy Analysis HBR case solution

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