SACRAMENTO, CA - A bright spot in an otherwise grim real estate market has been the performance of St. Anton Partners LLC, one of the few Sacramento area development companies doing more during the economic downturn than during the housing boom. St. Anton has increased revenue 19 percent over the past three years, from $105 million in 2005 to $125 million last year. The company has six apartment projects under construction or recently completed, with three more planned. It recently started renovating a Roseville housing complex, its first foray into rehabbing existing apartments, and is contemplating a push into the Bay Area and Southern California. "We couldn't be busier right now," said Peter Geremia, one of the company's founders.
The growth is all due to a liquid market for apartments. "Affordable housing is still able to be built in this market," said Lisa Bates, deputy executive director of the Sacramento Housing and Redevelopment Agency, who first worked with St. Anton more than 10 years ago when the company developed its first project in Elk Grove. Since then, St. Anton has completed 10 affordable-housing projects with the agency, delivering more than 1,600 units in the city of Sacramento alone. "We do a substantial amount of work with them," Bates said. "They're a solid developer who has worked well with their partners."
While capital financing for real estate ventures such as high-rise condos has become scarce, there is abundant capital to support construction of affordable apartments, said Steve Eggert, a co-founder of St. Anton. The Wall Street Journal reported this week that government-backed Fannie Mae and Freddie Mac have substantially increased the amount of lending for multi-family housing to balance out their portfolios during the housing slump.
Eggert and Geremia have dabbled in downtown redevelopment -- and have seen the tight lending restrictions firsthand as they try to build the Cathedral Square high-rise at 11th and J streets through a partnership with the Cordano Co. The 25-story building is approved but on hold until the traditional high-rise residential market rebounds, Eggert said. Geremia is also a partner in the newly opened G.V. Hurley's Restaurant & Bar in midtown Sacramento. But the cornerstone of their business has been the construction of affordable housing for working families and seniors. "The default rate on affordable housing is extremely low because it always stays full," said Eggert, who launched the company in 1995 with Geremia. Lenders see it as low risk.
St. Anton, named after an Austrian ski resort due to the partners' affinity for the sport, prefers to hang on to its properties once they're built. The company has a portfolio of more than 4,000 units spread across almost 30 projects in the capital region. With 200 employees, it's one of the area's larger developers and was the region's top or second-largest commercial property developer based on revenue in 2005 and 2006, according to Business Journal research.
One reason it's larger than the typical developer is that St. Anton handles financing in-house rather than through consultants and acts as its own general contractor and property manager. The latter is a key component that has redevelopment agencies singing its praises. Jan Shonkwiler, the housing program manager in the city of Roseville, where St. Anton is performing its first rehab of an old complex, said mismanagement can give affordable housing a "black eye." But she said St. Anton's property management arm has "integrity in what they do on the management side" by handling any issues before complaints arise from neighbors or the residents themselves.
It's not always easy. The rehab has meant that about 90 residents who no longer meet income restrictions had to move out. St.
Source: Sacramento Business Journal