ST. LOUIS—Catamount Capital, LLC recently sold a multifamily property located in the high-profile Central West End area of St. Louis for a 162% total return on equity over a 4.5-year hold, a good example of the bargains that were available in second-tier markets during the downturn.
The high-rise development, Hampden Hall Apartments, located at 4404 McPherson Ave., was purchased by the Dallas-based firm in December 2010 for just $4.5 million. At the time, many investors were keeping their focus on the top-tier core markets that promised stability.
"That was one of the reasons that we were focused on the second-tier markets; we felt there were a lot of opportunities," Greg Mattlage, president of Catamount, tells GlobeSt.com. Hampden Hall, for example, was alomost too good to be true.
"It was in excellent condition and almost fully-occupied," he adds. Furthermore, it sat in a wonderful location, in a "very well-established" neighborhood near Washington University Medical Center and the city's historic Forest Park. "It's not a market where you can develop new product because there is no available land." And "our market analysis indicated that minor value-added improvements would support higher rents."
The property did not need much work. "We just had to fix up the common areas and add some paint and lipstick," Mattlage says. "It was largely cosmetic."
A St. Louis, Missouri apartment operator purchased the asset in June 2015. Catamount realized a 36% average annual return and a 27% internal rate of return.
Catamount had bought the property for its cash flow and had not expected to sell it this year. "We received an unsolicited offer to buy the property," and the time just felt right. "The cap rates are low and its a hot market for apartment properties. We just decided we were happy with the returns."
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
