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Case Study: Bower Hill III Apartments |
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Pittsburgh, PA |
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History in the Market – In addition to a long history and success of developing, owning and managing various hotels and other real estate investments in the Pittsburgh area including The Marriott City Center and Pittsburgh Residence Inn, Pittsburgh was the birthplace and corporate headquarters of Interstate Hotel Corporate and FFC Capital Corporation. With over thirty years of experience and long-standing business relationships within the local market, various real estate opportunities are continuously reviewed to achieve further penetration, diversification and success within this market. |
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Opportunities |
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An eight story, 136 unit apartment project with 149,900 square feet of rental area situated on 8.5 acres was identified in Mount Lebanon, one of the most desirable suburbs in Allegheny County, situated six miles southwest of the Pittsburgh business district. The property had been well maintained and in excellent physical condition with an average occupancy of 99% over the past several years, as well as a waiting list of prospective future tenants. With an average unit size of 1,103 square feet and 1BR/1 BA, 2 BR/2 BA and 3BR/2BA apartment configurations, similar rental units were not available within the Mount Lebanon area at the time FFC Capital was contemplating the purchase. With a shortage in the market and no new development planned for the near future, a subsidiary of FFC Capital negotiated the purchase of the apartment complex from Bower Hill Holdings, Inc. for $10.3 million on June 12, 2001. |
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Performance |
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FFC Capital has continued to make renovations and improvements over the past five years with a total additional investment of $1.4 million. With a desirable location, property improvements and a strong property management team, FFC Capital has been successful in raising apartment rents without affecting occupancy. Unlike local competitors, Bower Hill III Apartments is 100% occupied with a strong, loyal tenant base. This project, with the strong tenant base and limited supply of comparable properties within the Mount Lebanon market, has continued to increase in value. Since acquisition, it is estimated that the property value has increased 16.5%. Although property valuation and cashflows continue to increase, FFC Capital is not currently contemplating a sale of this property as the initial strategy of purchasing this property was for tax deferral purposes. |
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