Carson estate: history and significance

Carson Estate

This case about the Carson Estate Company, a REIT based in the Los Angeles area that has been in existence since the 18th century. This paper will examine some key questions about the Carson Estate Company.

Survival

The Carson Estate Company has been able to survive for 15 generations for a couple of reasons. The first is that the way the company has been organized has held most of the company's assets together. The share structure has allowed for heirs to earn wealth from the estate without having to divide the company. Second, the company has been able to change with the times. Since its inception, the land the company owned was agricultural land, developed for resources like oil and water, and now is commercial and residential real estate in a major urban area. The ability to change with the times has been essential to its survival.

Governance

As a shareholder, I would want a seat on the board. But that's because I trust myself to be capable of handling that role. If I did not want a seat on the board myself, I would want to be able to trust in the board members. I would want some board members to have shares. I would want the board to be comprised of professionals capable of handling the job. I would also want to see the board rotated occasionally as well, as part of having a stronger governance structure. But really, I want a seat on the board.

Liquidity

When this was an oil and gas business, there would have been substantial liquidity. Today, as a real estate business, liquidity should come in the form of profits. There are no payments for this land, just property taxes, so the Company should be fairly profitable from the rent and leases that it has on its properties. Therefore, the company should be able to pay out dividends to the shareholders quarterly or annually to provide from some liquidity. Money would not be reinvested unless the shareholders agreed that this was a good idea. Otherwise, family members are more than welcome to sell their shares. If there is no public market for the shares, there might be a system in which the company did share buybacks, so that all of the other shareholders would effectively buy somebody out if they wanted to cash in.

Ownership