Now that the New York-based investment fund management firm hasmet its objectives with the 36-story building, it's looking to sellit at a possible 30% profit. Yet it isn't looking to pull out ofTampa Bay for good, partnering in an apartment complex near theUniversity of South Florida campus with a collegiate housingdeveloper.

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Sterling American announced July 21 that it purchased the540-unit St. Croix Apartments in a joint venture withGainesville-based Collier Cos. The deal is valued at just under$38.4 million, with Sterling American committing nearly $3 millionto capital improvements geared toward enhancing the property'smarket value.

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Jeffrey Smith, senior vice president of acquisitions forSterling American, says practically every aspect of the St. Croixcomplex is subject to renovation, from new appliances in units tosetting up a Web site for the complex. He views the acquisition asa solid bet, given its proximity to USF and its growing medicalresearch segment.

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"Although we're seeing softness throughout the multifamilymarket in Tampa Bay, I believe there is a barrier to recession inthe USF submarket," Smith tells GlobeSt.com. "My double-down isthat this submarket will be one of the first to recover."

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The area surrounding USF's main campus in northeast Tampa is oneof several submarkets where new apartments are being built,according to multifamily market observers. More than 10,000 unitsare in the pipeline over the next three years in Tampa's suburbanmarkets, according to a mid-year report by NAI Tampa Bay.

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"As these units come online, vacancy could increase in certainsubmarkets," T. Sean Lance, the firm's managing director in Tampa,stated in the report. "However, historical job growth andpopulation growth trends favor a relative short-term recovery forthe Tampa Bay region."

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Besides the NAI report's assertion that local apartmentoccupancy remains in the low 90% range, with average monthly rentsjust above $800, Smith believes St. Croix's strong location makesit a better bet. He notes that the complex has at least 700 sffronting Bruce B. Downs Boulevard near Bearss Avenue.

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Another strong vote of confidence in the apartments, which werepreviously owned by Sentinel Real Estate Corp., is that SterlingAmerican and Collier were able to obtain Federal Home Loan MortgageCorp. financing through Wachovia Bank. Smith says his firm andCollier, which owns thousands of apartments near the University ofFlorida, had to work to get Freddie Mac's attention during thesetough credit times.

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"Most likely, your only hope of getting a good debt relationshipanymore is through the agencies," Smith says. "It reiterates theirbelief in Tampa as a market that is in need of multifamily housingand good affordable housing. They also believe in our underwritingthat this market will rebound."

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Sterling American has invested in more than $3 billion worth ofassets in 43 states since 1991, with an asset mix of 55%multifamily and 45% in all other commercial types. The company hasbought and sold several apartment complexes in Florida, includingthe Palms at Livingston near Tampa, Hidden Harbour in Tamarac,Georgian Bay in Fort Myers and Cameron Lakes in Clearwater.

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The company decided to go a little off its own beaten path whenit purchased the now for-sale Park Tower, which Smith says hewatched being built while growing up in Largo. He recalls itsstatus as the largest office building between Miami and Atlantaupon its 1973 opening. Significant upgrades have been made to the472,462-sf structure over the last two years, including replacementof power transformers and wiring, as well as improvements to thebuilding's lobby and common areas. Tenants in Park Tower range fromvarious federal government agencies to a Tampa Bay Rays baseballteam store at street level.

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Currently at 85% occupancy, Park Tower is expected to attract aprice in the $60-million range, or between $130 and $140 per sf,according to local office brokers. Smith says Sterling American iscurrently weighing bids and will make a decision in the next fewweeks, which could include keeping the building.

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"We really like this property," he says. "If we don't get ourexpectations of value because of the debt markets, we're going tohold it and continue to manage it."

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