Case Study - XYZ Apartment Building (Part 1)

XYZ Apartment Building, located in Manhattan, New York, consists of 150 units. The property is 75% occupied. The monthly rental rates are as follows:

• 50 studios @ $625 / month
• 50 one-bedrooms @ $1180 / month
• 50 two-bedrooms @ $1750 / month.

Total monthly expenses are $1,250,000. Monthly debt service is $1,150,000.

The property has not leased according to the underwriting projections and as a result there is a significant amount of deferred maintenance. The property is 2 years old.

To add fuel to the fire, the Tenants put together a list of demands along with a timetable to cure the deferred maintenance. To this end, the tenants have scheduled a meeting with the Owner, Property Manager and Leasing Agent.

The Owners are outraged with the overall management of the property. In preparation for the meeting with the tenants, the owner has asked the Property Manager to put together a plan to cure the deferred maintenance. The owner would also like to see a marketing plan from the Leasing Agent. The goal is to have the building 100% occupied in 3 months.

Participants:

Students Determine if the property achieves breakeven

Property Manager Develop deferred maintenance plan

Leasing Agent Develop 3 month marketing plan

Tenants Put together list of demands / deferred maintenance

Lawyer Put together the agenda for the meeting

Students Present recommendations

Case Study - XYZ Apartment Building (Part 2)

The meeting last week with the Tenants, Owners, Property Manager and Leasing Agent was not as successful as the Owners would have liked.

From the Owners prospective, the Property Manager and the Leasing Agent did not provide enough information to make a prudent decision on the next steps. As a result, the Owners did not present a united front at the meeting which gave the Tenants the impression that nothing is going to be done to cure the deferred maintenance. To this end, the Tenants are considering seeking legal advice.

Another meeting is scheduled for next week. In preparation for the meeting, the Owners are requesting the following:

Tenants: Submit a formal detailed list of the deferred maintenance, prioritized and signed by the officers of the tenant association

Property Manager: Develop a detailed deferred maintenance plan. The plan should include the following:

• Deferred maintenance items prioritized
• Timeline
• Budget

Leasing Agent: Develop a 3-month marketing plan to achieve 100% occupancy. The plan should include the following:

• Analysis of the rate / month on the vacant space to achieve breakeven

• 3-month timetable to rent the vacant space
• Detailed marketing plan

Owners: Present a united front by doing the following:

• Making a decision on the future direction of the building including recommendations
• Working together as a team to bring back harmony to the building

PLEASE ANSWER THE QUESTION IN FULL. THANK YOU