Plaza Square to get makeover

[Brickcity]

Sansone, Gundaker propose makeover for Plaza Square

By Charlene Prost

Of the Post-Dispatch

05/05/2004

Plaza Square Apartments in St. Louis.

Plaza Square, which opened 43 years ago as downtown's largest, most prestigious residential community, is poised for a comeback.

Sansone Group has a contract to buy the five-building complex for $18.9 million. The company had been managing it for out-of-town owners.

Sansone and Gundaker Commercial Group Inc. are talking about teaming up on the project. Together, they'd pump an additional $10 million to $15 million into renovating the 13-story residential towers with everything from new mechanical systems and roofs to fresh paint, carpeting and appliances.

They'd also convert 312 of the 900 or so apartments into 156 condominiums. A sixth tower, owned by Bethesda Health Group Inc. and closed a year ago, isn't included in the plan.

We think Plaza Square is an untapped gem," said Jim Sansone, one of the firm's principals. "It is one of the best-located residential properties in the city. ... And it's going to be beautiful again."

It will be Sansone's first major project downtown. But the residential properties it owns or manages include 2,814 units elsewhere in the city.

Renovation will begin after June 18, he said, when Plaza Square will be sold as part of foreclosure proceedings by the U.S. Department of Housing and Urban Development. HUD guaranteed a loan for the owner, Plaza Square Partners of Galena, Ill. It bought the complex in 1996.

Roy Pierce, the HUD field-office director in St. Louis, said the owners haven't been making mortgage payments. He declined to give details.

To make Plaza Square viable again, HUD intends to buy the complex at the foreclosure sale and transfer it to St. Louis. The city would sell it to Sansone.

Sansone would pay HUD the appraised value, $18.9 million. Because of federal regulations, HUD could not sell the property directly to a for-profit company.

Another buyer could outbid HUD, but Pierce said he expects the sale to go through as planned. "This will put Plaza Square into the hands of responsible owners with a history of being good developers," he said.

Barbara Geisman, deputy mayor for development, said the city also wants to see Sansone as owner.

"Since they've been managing Plaza Square," she said, "they've made considerable progress getting the place cleaned up and evicting problem tenants.

"We're pleased it will have not only good management and good marketing. There will be ownership opportunities, and we think those will be wonderful condominium units."

Tim Sansone, also a principal at the company, said the occupancy at Plaza Square is about 40 percent. That's about what it was last year, when Sansone entered as manager. But that doesn't mean things haven't changed.

"When we took over, there were a lot of nonperforming tenants, meaning they weren't paying rent. ... We had to terminate leases with them," he said. "But we have improved the tenant base by bringing in more tenants and screening them properly, mainly for their credit and work history, to be sure they would be able to pay the rent."

Sansone Group said the 40 percent occupancy rate also is deceptive because most of the empty apartments need extensive renovation before they can be leased.

"We have about 320 residents now, and there are only 10 or 15 apartments left or available, meaning they are ready to be moved into," Tim Sansone said. "The rest need to be upgraded."

They plan extensive improvements inside and out.

They'll convert apartments in two buildings along Olive Street into condos, each with 1,100 to 1,400 square feet. Prices have not been set.

They'll keep layouts for a total of 588 apartments in the other three buildings. Those units range from studios with 480 square feet and monthly rents of $410 to two-bedroom units with 1,221 square feet at $1,010 a month. The apartments will get extensive makeovers, including central air conditioning, rather than individual air-conditioning units.

Sansone Group said residents can remain in the complex during renovation, most of which will be finished within a year. The company is hoping that everyone who lives there now will buy a condo or move into a renovated apartment, at prices comparable to what they're paying today.

"At this point, there is no plan to increase the rental rates solely as a result of the renovation," Tim Sansone said.

Sansone Group said most residents are singles in the 30- to 50-year-old age group and married couples 50 or older. They expect the renovated apartments and condominiums to attract more of the same.

Also, they intend to market the apartments, stressing the expansive views and prime location downtown.

"The location is one thing that attracted us," Jim Sansone said. "It's by parks, City Hall, Kiel Opera House, Savvis Center, the city library. ... It's one of the best-located residential properties in the city. Our goal is to invest the dollars that need to be invested, so we can add to the existing tenant base."

Mike Hejna, president at Gundaker, said that his company has been interested in Plaza Square for years and that it's "moving toward a joint venture" with Sansone.

What's coming at Plaza Square

156 condominiums with 1,100 to 1,400 square feet

588 renovated studio, one- and two-bedroom apartments with 480 to 1,221 square feet

New mechanical systems, roofs and security systems

Renovated lobbies and hallways

Exercise room, business center and community room

Fresh landscaping and exterior lighting

New name, not yet determined

320 parking spaces in an existing, underground garage and 120 on a surface lot

Reporter Charlene Prost

E-mail: [email protected]

Phone: 314-340-8140