Assignment Instructions
Compile your previous papers into one report to the client.(Papers attached below) and sample Pdf. Add an introduction to tell the client what you will study and a conclusion to tell the client your conclusions. Include a page of references.
Attachment
TO: Board of Directors of ABC Company
From: Charles Spittle, CFO
Re: Management Report for Potential Lease Opportunity
Date: August 12, 2011
Background:
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The lease on our current premises expires on December 31, 2011. The Company needs to find a
new home. Fortunately, the vacancy rate in the Richmond area exceeds 20% and affords the
company several good opportunities. Leases typically run for five years.
Discussion:
We engaged Norm Sandhurst of ACE Commercial Realty Advisors (dummy name) to assist and
advise us on the search, analysis and choice among various spaces.
A dozen or more spaces were initially visited from which a short-list of four was selected and
subsequently narrowed to two. There were several considerations in the selection:
1. Cost. Basic rent, operating costs, free rent, required leasehold improvements, landlord’s work,
tenant improvement allowance, furniture acquisition, etc. all informed the total cost of the space
over a five year period.
2. Flexibility. Given the impossibility of predicting the company’s growth over five years, the
ability to add additional space in the same building or close by, or conversely, to sublet unneeded
space, was paramount.
3. Amenities, look-and feel. Clevest’s assets are its people. A pleasant work environment is
important to attract, motivate and retain the best people.
4. Cost of moving. All else being equal, it is easier to stay in the current space than execute
another move.
The two final choices among the dozens considered were:
1. Site 1, a new space.
2. Site 2, out current space.
Appendix A to this report (not attached) summarizes the financial and qualitative factors for the
two final choices. We considered the following:
1. Both places are about the same size.
2. Both places are in executive parks with potential expansion to adjacent buildings, but Site 2
has a decided edge. Note the site plans for both buildings attached to this report.
3. Rent at Site 2 is significantly more in the latter years of the term, but this additional cost is
more than offset by free rent in 2012-13, cheaper furniture costs, lower improvement costs and not incurring the expense and downtime of a move. On a net present value basis, the spaces are
virtually equal.
4. There is more free parking at Site 2.
5. Site 2 has a better feel to it: higher ceilings, and less crowded.
In weighing these factors, we considered that there was no real incentive to move to poorer
quality space with less parking. Therefore, we are requesting the Board to approve our choice to
stay at Site 2.
Recommendations:
1. That the Board of Directors receives this report for information.
2. That the Board of Directors approves management to negotiate a five year lease for the
premises at Site 2 substantially on the parameters indicated in Appendix A to this report.
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