Schulich School of Business

Millegan Creek
An Investment Analysis
Ashwin Kumar (210693430) Kairvee Malik Nishant Patel Pankaj Narang Sagar Tawde


So the increase in demand for houses is compensated by the supply of newly constructed apartments. Companies like IBM.Some of the issues for Fleet to finance Millegan Creek Apartments are whether JPI would be able to repay the loan or not. Also. In March 1994. The Austin Apartment market has gone through its ups and downs. how a change in interest rate will affect both the parties. Apart from this Fleet Bank has to decide whether the deal negotiated by Tom with JPI should be changed or not i. it can decrease from 1993 onwards. Motorola Inc. Apple Computers. The economy in Austin has been growing for the last so many years and has been ranked near the top of the list of the most desirable cities in which to locate businesses. JPI Multifamily Inc. (JPI) is a well-known developer. they had . we see that there is an approximately addition of 30. there is an assumption made by Tom that over the next three years there would be around 8744 units built. it will be difficult for developers to continue with their projects if they do not meet the required standards. Going with this trend. When we look at the population data. we can say that occupancy rate might go down in future i. Fleet is also concerned about the general economy in Austin.000 people every year. There are various high technology companies which have set up their base in Austin. and Texas Instruments employ an approximately 23000 high skilled employees making Austin one of the best for Knowledge workers. how JPI would pay back their loan and if the demand for apartments will stay in the market.e. famous for surviving the Texas real estate crash. Moreover with the environmental concerns increasing in Austin. It has an experience of building a large number of apartments.e. Looking closely we see that there is a trend of decreasing occupancy percentage every 5-6 years.

It tries to continually refine and improve their buildings and amenity packages based on their experience and periodic surveys of their residents.83 per square feet per month. It had some interesting apartment projects. Millegan Creek Apartments would be a typical JPI luxury apartment targeting renters with high discretionary incomes. Due to the property location being outside the City of Austin. It was also very close to Austin’s high tech companies. the property taxes were lower and zoning approval easier. JPI managed about 10. When we compare these apartments with the others in the same area. JPI would be able to market Millegan Apartments successfully. In addition to developing apartments. was upgraded from a two lane to a five-lane road. which brought about 15. Even the McNeil Road. The site would include amenities like two swimming pools.000 cars in an east west direction past the site each day.eight projects with 2. Millegan Creek Apartments would be a typical JPI luxury apartment complex targeted at people with lifestyle choice to live in rental apartments. JPI got interested in area to the North of Jollyville road and outside of the Austin City limits after the Parmer Lane got expanded from a two lane to a six-lane road. It has already developed two apartments. which had takeout commitments from General Electric Credit Corporation. Location of the site plays an important role in JPI choosing the location for the development of the apartments. . leading to excellent north-south access.000 apartment units. in Austin.700 units under construction. one in South west part town and other in North Central area. which made the site more desirable. We believe that with a focused customer and competitive pricing. we find that JPI have priced Millegan Apartments quite competitively and at a rental rate of $0. a clubhouse.

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