Pilgrim Assurance Case

Pilgrim Assurance is a case that involves a sealed bid auction. Therefore, the auctioneers will need to sell the building to the highest bidder involved at a minimum bid of $15 million. David Bailey is given the decision to decide on how much to bid for an office building. Furthermore, he needs to make the decision whether to lease it as office space or to convert this office space into condominiums. In this case, I will analyze the goals and objectives of Bailey as well as the other participants. The sealed bid auction indicates that they are willing to take a chance on the market and try to receive high bids. There is no problem with the government participant besides using permits to do renovations. There is …show more content…

Five year rental rate would be fixed. 5,000 vacancies. In the past few years in Boston, the employment saw a decline, even though nationwide employment rose.
Rental rates have been on the decline since 2001 however the decrease from 2003 to 2004 has been far less than the decline from 2002 to 2003. However, occupied office rental space was steadily increasing. It is important to note that South Station market had no new supply on the market and occupation was steadily growing however the rent was also lower than the other three markets by well over ten dollars except for the waterfront. In Exhibit 6, wehave the cap rate graph. In the graph we can see that for each type of real property from years 2002 to mid 2005 the cap rate has been dropping. In terms of this case, the Central Business District Office cap rate has fallen to about 7%.

According to Exhibits 7 and 8 we can see that the condominium housing market in the Boston area has been quite the opposite of the office rental market.
The building can be converted into 150 apartments with an average size of 1,060 SF. Conversion cost would be 35,000,000. In addition many of Bailey’s partners made a fortune in conversions. As of mid 2005 over 14,000 residential units primarily condominium was in the construction pipeline.
From exhibit 8 we can see that psf