How do you evaluate an investment opportunity in the private capital markets?
Whether it’s buying an existing company that’s already operating or making an LP investment in real estate, the approach is the same – you need a framework.
Today, we’re going to walk through a real-world case study using my Growth Predictor Framework, which I regularly use to analyze investment opportunities.
Who Am I?
If you’ve been following my work, you’re already familiar with this framework. But for those new here – I’m Walker Deibel, Wall Street Journal bestselling author of Buy Then Build, creator of the Acquisition Lab, and founder of Build Wealth, a private equity company leveraging the JOBS Act to bring investment opportunities to our community.
Essentially, I take the investments I’m making and bring them to our community so we can invest together.
The 314: A Case Study
Earlier this year, we launched our third investment opportunity, a project called The 314, located in my hometown of St. Louis, Missouri.
Today, I want to walk through the framework I used to evaluate deals by using The 314 as an actual case study. Through this framework, you’ll see why I choose the opportunities I do in the private capital markets.
Let’s dive in.
Step 1: Evaluating the Offer
When evaluating an investment, the first thing I focus on is the differentiated offer – what makes this opportunity unique?
With The 314, this wasn’t just another multifamily project. It was a mixed-use development that combined residential, commercial, and structured parking in a way that would reshape an entire neighborhood. More than that, it was the capstone project of a larger revitalization effort, designed to be a landmark that would define the area for decades.
The Stadium Effect: A Neighborhood Transformed
This deal existed because of a fundamental shift in the neighborhood.
For years, this area was a dead zone – land that had no real economic value, the remnant of an unfinished highway interchange. Then, a wealthy family in St. Louis stepped in, bought the land, and built a world-class soccer stadium. Overnight, this forgotten part of the city became a hub of activity.
Unlike traditional stadiums – like Busch Stadium, which is massive and closed-off – this one was designed as a public space that integrates into the city. From The 314, you could literally look down at the game. The district around the stadium wasn’t just built for game days; it was designed to be a vibrant, livable neighborhood where people actually want to spend time.
This wasn’t just a real estate project. It was a chance to invest at the inflection point of a major transformation.
Why Mass Timber Changes the Game
One of the most unique aspects of The 314 was its mass timber construction – a building method that’s common in Europe but just starting to gain traction in the U.S.
Source: WoodWorks
Mass timber offers significant advantages over traditional steel and concrete:
- Faster construction timelines
- Lower environmental impact, offsetting 7,200 tons of CO₂
- Fire and seismic resistance, despite the misconception that a wood-based structure is a fire risk
- A high-end, natural aesthetic that creates a completely different living experience
Mass timber buildings feel different. They don’t have the cold, industrial feel of a typical high-rise. Instead, they bring in warmth, natural textures, and an organic design that makes them far more desirable to tenants.
This isn’t just theory – it’s already playing out in markets like Milwaukee, where The Ascent (a similar mass timber high-rise) leased up ahead of schedule and is commanding higher rents than any other property in its class.
Meeting Demand with a Premium Offering
Beyond its design and construction, The 314 was filling a clear market gap.
High-end residential options in this part of St. Louis were scarce. Demand for premium housing was outpacing supply, and comparable projects in similar markets had already proven this type of development leases fast and outperforms traditional multifamily investments.
But what made this deal even stronger was who was behind it.
The team leading this project wasn’t just coming in as outside investors. They already owned a significant portion of the surrounding neighborhood. They weren’t guessing at the market dynamics – they had direct experience managing assets in the area and knew exactly how to make this project thrive.
The Bigger Picture: Applying the Investment Framework
At the time of this investment, I was raising capital for The 314 because I saw a unique, well-positioned opportunity that checked all the right boxes:
- A differentiated offer
- A neighborhood with massive momentum
- A game-changing construction method
- A strong demand-supply imbalance
- A proven team with deep local knowledge
But beyond The 314 itself, the real takeaway is how to apply this framework to any investment.
Every great deal has a clear story – one that explains why it’s positioned to win. Whether it’s real estate, private equity, or buying an existing business, the same principles apply.
The key is knowing what to look for – and how to spot opportunities before they become obvious to everyone else.
Step 2: Feeding into Existing Demand
After identifying a differentiated offer, the next critical question is: Are we feeding into existing demand?
The best investments don’t try to create demand from scratch. That’s what startups do – and most of them fail because they’re forcing product-market fit.
Instead, I look for opportunities where demand already exists but supply hasn’t caught up.
In the case of The 314, the demand is undeniable.
The Growth Driving This Market
St. Louis might not be the first city that comes to mind for explosive growth, but the data tells a different story.
- 31,000 new jobs were added in the last 12 months.
- St. Louis ranked 7th in the country for job growth.
- Over 50,000 jobs exist within a one-mile radius of this development.
- This isn’t driven by a single employer – it’s happening across multiple industries.
At the same time, there’s been no new construction in this part of the city since the 1950s.
That’s the setup I look for – strong demand, zero new supply.
The “Donut Hole” Effect: Why This Location Matters
Surrounding this area, there’s been massive revitalization. West, south, and north of downtown, development has been booming.
But right in the middle? Nothing – until now.
For decades, this pocket of the city was an urban dead zone. Then the stadium project happened, and overnight, everything changed.
The missing piece in the middle of all this economic activity became the biggest real estate opportunity in the city.
That’s why The 314 was positioned as the signature project of this transformation.
More Than Just Housing: Meeting the Needs of White-Collar Workers
Beyond residential demand, there’s another gap in the market: premium spaces for the white-collar workforce.
Tens of thousands of professionals work in this area, but there’s a problem – they have nowhere to go.
If they need to take a client to lunch or meet for a business discussion, they have to leave the district.
That’s why The 314 wasn’t just about housing – it was about creating an integrated lifestyle experience.
- The 8th-floor restaurant was designed as a high-end space for business meetings and dining.
- It connected with the rooftop pool, fitness center, and shared spaces, making it a destination.
- It had a separate entrance, allowing it to function as a high-end venue for professionals in the area.
This wasn’t just another apartment building – it was an anchor for a new way of living and working in this district.
Bringing It Back to the Growth Predictor Framework
So, when evaluating this deal, here’s how it checked out:
- Is there a unique offer? Yes – first-of-its-kind luxury living in an emerging district.
- Are we feeding into pent-up demand? Yes – both for premium housing and high-end business spaces.
This is the kind of supply-demand imbalance that makes a deal compelling. That’s why I invested.
Step 3: The Financials – Does the Money Make Sense?
Once I’ve assessed the differentiated offer and existing demand, the next thing I always look at is the financials – because at the end of the day, the numbers have to work.
Investing is about asymmetry – finding opportunities where the risk-adjusted return is highly favorable.
In the case of The 314, the underwriting was conservative – lower rents than comparable properties in St. Louis and Milwaukee – but the model had already been proven successful. The Ascent, a similar mass timber high-rise in Milwaukee, reached full capacity ahead of schedule and commands premium rents.
Beyond that, The 314 was surrounded by high-income jobs, ensuring strong demand for luxury apartments.
Following the Smart Money
Another critical factor: Who else is investing?
Some of the wealthiest families in St. Louis had already put serious capital behind this area. These weren’t just passive investors – they were the same people driving revitalization efforts, leading nonprofits, funding major projects, and even building the stadium that triggered the neighborhood’s transformation.
For decades, this part of the city was a dead zone. Now, it’s the center of a massive economic shift – and it had the right people backing it.
The Investment Structure: How the Money Works
This deal was structured as a co-GP investment, which differs from a traditional real estate syndication.
Normally, in a syndication, you have:
- General Partners (GPs) – The operating team running the deal.
- Limited Partners (LPs) – Passive investors providing capital but with no operational role.
Here, we invested as co-GPs, which meant we got GP-level returns but with LP-level responsibilities – a best-of-both-worlds scenario.
How Investors Made Money
The financial model worked like this:
- Year 1: Investors received a 10% preferred return, meaning AHM (the developer) made nothing until that hurdle was met.
- Years 2-5: The building stabilized, generating double-digit cash-on-cash returns, similar to a traditional LP investment.
- Year 6: The plan was to sell the building and exit – but if the market wasn’t right, we’d simply hold and continue earning strong cash flow.
At that point, we’d be sitting on a fully stabilized, iconic asset in the heart of downtown St. Louis – a strong position no matter what.
Why Private Market Investing Works
This is exactly why I invest in the private markets.
In public markets, everyone has access to the same assets, the same information, and the same opportunities. That’s why returns are capped – because the market is fully efficient.
But in private markets, access is limited.
That’s where you find true upside – where supply and demand imbalances create opportunities for higher returns with calculated risk.
The Takeaway
This is the framework I use for every deal.
- The offer has to be unique.
- Demand has to be strong.
- The financials have to make sense.
- The right people have to be involved.
When all four align, that’s an opportunity worth pursuing.
Step 4: The Team – Who’s Executing This?
Alright, let’s talk about the team.
A deal is only as strong as the people behind it, and AHM is my real estate team.
I’ve worked with AHM on multiple projects, and while I’m not part of their company, they are the real estate team I trust the most. I’ve invested heavily with them – so has my family. My brother-in-law even works on one of their projects. That’s how much I believe in them.
Now, I’ve spent 18 years buying businesses across multiple industries, and I still see real estate, when done right, as one of the best risk-adjusted returns available. That’s why I invest in it.
AHM’s Track Record: Proven Execution
This isn’t AHM’s first time revitalizing a neighborhood. The difference here? They already own 12 acres in the area.
That’s a massive advantage.
I’ve seen what’s happening in this part of St. Louis. The stadium unlocked the area. Job growth is accelerating. The transformation is already underway.
AHM recognized the opportunity early, invested millions of their own dollars, and has a clear plan to execute. They’ve done this before, and the numbers back it up.
The Numbers Tell the Story
- $200M+ in assets under management
- 16 active development projects
- 30%+ average IRR on completed projects
- 18 stabilized projects averaging a 29% IRR
- 13 sold projects averaging a 32% IRR
This is a deeply experienced team with a clear strategy – targeting stable areas primed for revitalization.
When evaluating a deal, who you’re investing with matters just as much as the deal itself. And that’s why I put my trust in AHM.
Step 5: Momentum & Transformation
After evaluating the team, the next factor I focus on is momentum and transformation – because in real estate, you’re betting on change.
And in this case, the stadium changed everything.
For years, this part of downtown had been a dead zone – an abandoned highway interchange that never got built out. No new development. No economic activity. But once the stadium came in, it unlocked the entire neighborhood by bringing in jobs, foot traffic, and investment.
AHM Saw the Opportunity Early
Back in 2021, AHM was already rehabbing two buildings nearby. They watched the stadium development unfold and saw the same thing I see now – a neighborhood about to take off.
That’s when they started buying up properties.
They didn’t just make a small bet – they went all in, taking on risk, securing key locations, and working closely with the city to set this project up for success. They spent a full year locking in:
- 10-year tax incentives
- Sales tax abatements on construction materials
- Full entitlements to break ground
Now, they own so much property in the district that they even control the liquor licenses for commercial businesses in the area.
The Timing Advantage
Here’s the key insight:
By the time The 314 breaks ground in a year, every other AHM project in the neighborhood will already be complete.
That means The 314 won’t be a first mover – it will be the capstone project, launching into an already revitalized district.
AHM didn’t just get lucky – they anticipated the transformation and positioned themselves to own it.
Step 6: Understanding the Risks
Look, at the end of the day, every investment has risk.
You can do all the due diligence in the world, but things can still go sideways. A new president gets elected. A war breaks out. COVID 2024 somehow happens. Anything can go wrong.
But when I think about this deal, the key risks really boil down to three things:
- Can we secure the LP piece?
- Is mass timber really as good as they say it is?
- Will this neighborhood actually take off?
Breaking Down the Risks
LP Capital: Raising capital is always a factor in real estate deals, but at the time, we were already in talks with multiple groups – family offices, institutional investors – about taking the LP portion. While nothing is ever guaranteed, the level of interest was exactly what I wanted to see at this stage.
Mass Timber: If you’re not familiar with it, mass timber might sound like a new, unproven material – but it’s not. It’s been widely used in Europe for decades, and now that U.S. regulations allow it, we’re seeing successful high-rise projects in cities like Milwaukee and Portland. The data is there: it’s sustainable, faster to build, and even has fire resistance comparable to or better than steel.
Neighborhood Growth: This was the least concerning risk. The stadium transformed the area overnight, the city had already invested billions into revitalization, and AHM had put millions of their own capital into the surrounding properties. The incentives were aligned at every level.
Why It Comes Down to Fundamentals
No investment is risk-free. But when you analyze the factors driving this deal – the demand, the financials, the timing, and the team behind it – it had all the right elements for success.
The Wealth Stack
So, how does this tie into buying businesses?
I call it the Wealth Stack – owning cash-flowing assets that build long-term financial freedom.
For me, that means:
- Owning businesses for active income
- Investing in real estate for passive wealth creation
- Leveraging private market opportunities for higher returns
If you’re interested in learning how to acquire businesses, that’s exactly what we teach at Acquisition Lab – the premier community for acquisition entrepreneurs.
If you’re ready to acquire a business in the next 12 months, reach out to us today and get on the fast track to becoming an acquisition entrepreneur.
