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Medium Profitability Risk Analysis Sustainability Operations

WolverineHomes

#Real Estate & Energy #Real Estate #Energy #Utilities #Sustainability
ProHub Comment

This case tests quantitative risk analysis skills, scenario modeling, and strategic trade-off analysis. The candidate must recognize that the property repositioning strategy (selling in Ann Arbor/Ypsi, buying in Jackson) actually worsens the financial outcome ($25M loss vs. $8M loss), requiring them to pivot toward the technology investment solution. The case emphasizes the importance of considering climate risk in real estate decisions.

Estimated Time 15 minutes
Difficulty Medium
Source ROSS
50 / 100
WolverineHomes owns and manages over 200 single-family homes in the Ann Arbor, Ypsi, and Jackson areas. Recently, severe weather events have caused numerous power outages across their properties, resulting negative tenant experiences and decreased revenue from bad reviews left about properties managed by Wolverine, and tenants leaving their properties. They’ve come to us to help them understand how they can create a better tenant experience knowing severe weather storms are only projected to get worse.

Clarifying Information

  1. Their current rating is at 3.0 stars, and they’d like to get to 4.5 stars.
  2. Over the last 12 months, they have lost 20 tenants that they haven’t been able to replace.
  3. Each house typically costs $4K/ month to rent.
  4. They would like to mitigate these loses as much as possible.
  5. Candidate can assume 6-month average since tenants left in different months.
  6. Candidate should be able to calculate: 20 * $4K * 6 months = $480K revenue lost.
  7. They haven’t conducted an analysis to understand the increasing likelihood of increasingly severe weather events but they are frustrated with the seeming increase in severe weather events.
  8. Candidate can assume 1 tenant = 1 single-family home throughout case.