This case is about Willy Welsh, an Atlanta developer, who was keen to get approval of $3 million construction loan so that he could commence the construction of 216-unit â€œCalifornia-styleâ€ garden apartment complex in Savannah West.
Alison Porter, the veteran of Chemical Bankâ€™s â€œReal Stateâ€ on the return trip to Savannah, met Willy Welsh where she promised to provide an answer whether to provide her loan or not.
Welsh has the attitude of becoming the Market leader in Savannah, therefore, he scheduled to start the work from September 1. There was also the issue of initial biding of the subcontractor if the project did not commence over the time resulting in the subcontractors finding other work due to the pressure of competition that was revolving in the market.
The empire state building also approved to provide the loan to Willy Welsh if he committed to complete the specified construction by September 1, 1978.
Relation of West and Chemical Bank
The chemical bank was involved in the Greenbrier apartment distress, a 400 unit in Atlanta. Thomas Herbertâ€™s company in Atlanta, who was the developer of this project ran into financial difficulties and delays of projects which led into less tenants of 15 % which was contrary to provide loan of Saving bankâ€™s commitment. Therefore, for the project the Chemical Bank decided to find out other developer to finish the project.
Chemical bank then assigned David Hancock to take charge of the project who was made to contact Willy Welsh for the development of the project. His firm provides the consultation with chemical reviewing Greenbrier Project and decided to finish the project with the cost of $3.5 million. The project was completed within 5 months and under the minimum budget, whereby through magnificent marketing they were able to achieve the 40% occupancy in four months and 90% occupancy in nine months. Hence, after finding the suitable project to purchase the Chemical bank was able to receive full repayment of its loan
When David Hancock learned that the Willy Welsh is going to acquire the $ 3 million loan from Empire State Saving Bank, he found that Willy Welsh is a stable and competent customer for the bank. He praised the efficiency and delicateness of Willy Wes over the successful completeness of Greenbrier project. However, after this news Porter set up the meeting with Willy Welsh to provide the loan of $3 million to him
Savannah West Case Solution & Answer
The Chemical bank is the fifth largest bank in New York and sixth largest in terms of capital and deposit in United States of America, there are other departments that were operating within the chemical Bank with the name of â€œMetropolitan Bankâ€, â€œCorporate Bankâ€, â€œTrust and Investment Bankâ€, however, the â€œReal Stateâ€ was introduced by Chemical Bank in 1976. One of the major achievements of the real state department is the reduction of loan to Real estate Investment from $ 490 million to $332 million.
Real state also provides the banking service to its customers and lock up facilities and short term line of credit. The goal of the Real State Bank is to attract its potential new customer on a nationwide basis and develop brad customer relationship.
Undertaking the project is worthwhile for the firm as the competition is fierce in the market and this would be a better opportunity for becoming the market leader in Savannah West, as the firm has specialized in construction unit apartment that also has the subsidiary to manage its income producing properties.
This planning to launch 216 units project is vital for dominating the construction market in Savannah West as the new trend of population of Savannah has 80% of its population in Chatom country and it is increasing at the rate of 1% per year. The expected rate for the single family housing plan is increasing by 500% in Chatom Country, this is the best indicator for the future planning of Single family housing plan in Savannah west.
We can apply SWOT in analyzing the market of Savannah West,
The competition in the industry is fierce as there are many competitors in the Savannah West, but due to lack of lack of multi-family construction the vacancy rates in existing apartment are dropping dramatically. The successful completion of projects is the strength of the firm which can help the firm in acquiring the new projects easily……………………..
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