Pinckey Street Analysis
Participants and Objectives
There are in total three equity holders in this case, Edward Lee, his wife and the seller. Their objectives are summarized respectively in the following section. Edward Lee wanted to use his $240,000 cash on hand to do some rewarding investment especially in the real estate field since he is personally interested in it. He wanted to purchase a property (instead of renting) and build his investment basis on it without taking great risk. Meanwhile, he held a strong perception that the Back Bay-Beacon Hill area had great potential and it is his will to invest there. However, his wife had different goal with him. She was just not on the stage of being ready to purchase a property and live with tenants while the risk of investment worried her as well. The third equity holder, the seller, was motivated to sell the house since this property had already become a financial burden for him. He wanted to sell this house at a reasonable price and just get out of the game as soon as possible.
National government is also an important participant in this case. The property is located in the historical area, which suggests that it is the government’s responsibility and goal to not allow any change in external appearance on this property. Also, it expected the owner to follow environmental, safety and other regulations. The state government has the right to issue permits of actions related to building, reconstruction and extra. Its goal is to examine the owner behaves appropriately according to laws and regulations.
Tenants objectives are not directly pointed out but can be generally inferred. The existing tenants may not be willing to be evicted or have higher rental and would like the things keep going on routinely. If Mr. Lee decided to finish the renovation and contact for new tenants, the future tenants may expect to have acceptable rental, good house condition and professional services (like cleaning work of common area and maintenance job). They would also like the building to be reconstructed with energy efficient materials so that they can bring down the energy cost.
For lenders, there are three potential lenders in the case, Plymouth Rock Bank, Another local saving bank (represented by Celia Bicego) and the seller. PRB had already had a loan contract on this property with present owner and they would like to continue this contract with Edward with certain necessary compromise. However, PRB considers about avoiding risks as well and at this point of time, being averse to risk, they would not give the mortgage of more than 70% of anticipated property value. The bank represented by Celia Bicego was trying hard to attract new client. They were really looking forward to getting this new deal. However, with the belief of avoiding risk, they need Edward to be personally liable to the mortgage and the procedural fees are something they cannot deduct. The last lender,