News
Mt. Vernon's Rise
January 10, 2011
| Say what you want about public schools, but we know that r-e-c-e-s-s-i-o-n spells opportunity. Mt Vernon Co founder Bruce Percelayhas evidence: The Boston market is on the rise, albeit without the big bargains of the '90s recession when his firm came into its own. Last month, he did deals (mostly multifamily) valued at about$50M. |
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| We snapped Bruce in his Back Bay office (as he just happened to pick up Nantucket, which he publishes). During the '90s recession, Wall Street and institutional investors viewed multifamily rentals as an an asset class for ?sissies,? he tells us, with steady returns and 10% cap rates. But that worked for Mt. Vernon: It amassed 1,400 units including some it bought for $85/SF, now valued at $700/SF. Later, Wall Street and institutions investors discovered apartment buildings and now, he says, cap rates are more like 5%, mirroring multiples of public companies. |
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| We snapped Liz Morency with treasurer James Garnache, who says with today's lower returns Mt. Vernon focuses on adding value. First, they upgrade common areas, then as tenants vacate, they renovate apartments to condo standards. Bruce says he only rents apartments he would want to live in and his management team provides Class-A service even for buildings in B locations. Of course, rents are commensurate. Annual tenant turnover in Mt. Vernon properties is about 20%, compared to the more traditional 30%. |
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| We're going to call that an invisible football that Jay Bisognano is holding, as he quarterbacks projects and acquisitions. (He's standing with Alson Askinazi.) When Mt. Vernon looks for a building to buy, it targets assets that are convenient for the well-educated people who work in healthcare, higher education, and life science and technology, the sectors that have insulated theregional economy from some of the worst effects of the recession. In its existing Charles Street apartment buildings, 65% of the tenants work at MGH and the rest in Kendall Square. Bruce says intelligent people make good tenants. They're more thoughtful and responsible. They also attract investors to Boston. Bruce says, ?Money follows the brains.? (Guess naming Mark Zuckerberg Time Man of 2010 was no fluke. The decade of the nerd continues.) |
