Case: The Millegan Creek Apartments
Read: Safdie, Chapters 8,9: Mumford

This case represents a good opportunity to use all the basic/key concepts in Real Estate Development. The case provides all the types of information usually available to a developer/lender and asks for a decision.

Your task – as Tom Hayden -- is to study this situation and define the project/deal, the key issues in making this loan and your recommendation. (For those who were in the in the "Basics" course, this has already been done.)  For those new to this course, please write a 1/2 page memo, stating your key conclusions.  This should be backed up by pro-forma calculations – maximum of one Excel page and possibly one page of well-defined sensitivities -- showing expected outcomes of the project from the point of view of the developer – including the NPV and IRR – for 7 years of operation after rent-up, before sale of this property.

As you prepare this case, please consider such issues as:

• How suitable is this product to its intended market? Would you change it? How would that effect the cost? Income?
• How convinced are you that management can deliver the product and the market on schedule? What difference will it make if they are late? Over budget?
• What is the role of the construction lender in this situation? What can you do to protect the Bank – without losing the business – assuming that you want it?
• What is the role of the long-term lender? If you were with a pension fund, would you be willing to commit today to be that lender? On what terms?
• Would you personally like to be an investor in this deal? What would you pay JPI for 49% of the equity in it?