Case Detail

Case Summary

Wildcat Capital Investors: Real Estate Private Equity

Case Number: 5-310-510, Year Published: 2011, Revision Date: February 01, 2012

HBS Number: KEL553

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Authors: Craig Furfine; Jessica Zaski

Key Concepts

Real Estate, Commercial Property, Private Equity, Waterfall

Abstract

Wildcat Capital Investors is a small real estate private equity company. Its MBA intern, Jessica Zaski, is asked to develop a financial model for the purchase of Financial Commons, a 90,000 square foot office building in suburban Chicago. By simple metrics, the property seems to be a good value, but with credit conditions tight, Jessica must consider whether outside investors would be comfortable with the risks of investing in the midst of a severe commercial real estate downturn.

Wildcat is designed to give students exposure to both the quantitative and qualitative aspects of investing in commercial real estate through a private equity structure. Beyond the numbers, the case allows for a discussion of the process of finding suitable real estate investments. The importance of the simultaneous negotiations that Wildcat must have with the seller, the lender, and the outside investor can be emphasized.

Learning Objectives

By working through the financial models, students will take a given set of assumptions and analyze the cash flows expected to be received by the equity partners of Financial Commons. With a given deal structure, the students can then model the cash flow to both outside equity investors and Wildcat, learning the mechanics of private equity. The model will allow students to investigate how the variations in the underlying assumptions affect returns to the property and to the investors.

Number of Pages: 12

Extended Case Information

Teaching Areas: Finance, Real Estate

Teaching Note Available: Yes

Geographic: Chicago, Illinois, United States

Industry: Real Estate Private Equity

Organization Name: Wildcat Capital Investors

Year of Case: 2009