Case Detail

Case Summary

A Tale of Two Properties: Debt Strategies for Financing Commercial Real Estate

Case Number: 5-318-503, Year Published: 2019

HBS Number: KE1106

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Authors: Craig Furfine

Key Concepts

cash flow analysis, financial analysis, financial strategy, real estate, strategic planning


Stanley Cirano owns two retail shopping centers in suburban Chicago. With interest rates near all-time lows in late 2015, Cirano believed it was an opportune time to consider the debt financing of his properties. Although the properties were similar in many respects, the lenders willing to lend against each property were offering noticeably different terms. Cirano had to consider not only the interest rate and size of each potential loan but also the differing fees, potential prepayment penalties, and variations in recourse to make the best decision for each property.

Learning Objectives

After students have analyzed the case they will be able to evaluate debt offerings from different lenders and understand their strengths and weaknesses; calculate the cost of refinancing and defeasance, and understand the strategies for using these tactics; and evaluate a lending opportunity from the lender's perspective, especially on a property with uncertain prospects.

Number of Pages: 19

Extended Case Information

Teaching Areas: Finance

Teaching Note Available: Yes

Geographic: Chicago, Illinois, United States

Industry: Commercial real estate/retail

Organization Name: Cirano Properties

Organization Size: Small

Decision Maker Position: property owner

Decision Maker Gender: male

Year of Case: 2015