Down market, Uptown price

by Burl Gilyard

South Minneapolis apartments sell for $30 million, perhaps a result of ‘pent-up demand’

By all accounts, the investment market for commercial real estate is slow.

But the recent sale of the Uptown City Apartments project in south Minneapolis suggests a strong investor appetite for solid multifamily properties.

Dallas-based Invesco Real Estate paid $30.1 million for Uptown City Apartments, a robust price that works out to just shy of $185,000 per apartment unit. The seller was Farmington Hills, Mich.-based Village Green Companies and its partner in the development, Hartford, Conn.-based Cornerstone Real Estate Advisers, LLC, an arm of the Massachusetts Mutual Life Insurance Co.

The deal closed on September 2.

“We had more than 70 confidentiality agreements returned. We had a good and solid shortlist of buyers,” said Gina Dingman of Colliers Turley Martin Tucker, who brokered the sale of Uptown City Apartments with her colleagues James McCaffrey and Julie Lux.

“I think there’s been so little property come on the market in the Twin Cities that there’s a pent-up demand here. People are looking for quality investments in good locations,” Dingman said.

Uptown City Apartments is actually two separate buildings that stand a few blocks apart at 714 and 1220 West Lake Street, respectively, and offers a combined 163 apartments.

Dingman said Uptown City Apartments was 98 percent leased at the time the deal closed. The development includes 222 enclosed parking spaces and some retail space.

Dingman declined to discuss or comment on the sale price, which surfaced through public records.

Village Green Companies started the recent local trend of developing new Class A apartments with Uptown City Apartments in 2003.

Andrea Roebker, a spokeswoman for Village Green Companies, said that Village Green is typically a long-term owner of its apartments. But in this case, she noted, the firm’s joint venture partner had a right to pursue a sale under the terms of their contract. Village Green’s partner in the project was

Cornerstone Real Estate Advisers, LLC, an arm of the Massachusetts Mutual Life Insurance Company.

Abe Appert, an apartment broker in the local office of CB Richard Ellis, said it’s been a quiet year so far for apartment sales, with only three sizable deals closing since the beginning of the year.

But he expects more deals before the end of the year. Appert said 10 local apartment buildings are currently on the market for sale.

“The second half of the year should be busier for us as well as the entire market,” Appert said. “There is a lot of new capital chasing apartments in the Twin Cities today.”

The Uptown City deal marks the second large local apartment deal to close within the last month, according to local property sales records.

The Boston-based Intercontinental Real Estate Corp. bought the 353-unit International Village in Bloomington for $30.1 million, in a deal that closed on August 12. The property was 98 percent full. Appert is part of the team at CB Richard Ellis that brokered that sale.

The pricing on that deal works out to roughly $85,000 per unit. In contrast to Uptown City Apartments, the International Village building dates to 1968.

Earlier this year, Seattle-based Olympic Investors paid $24 million for The Cosmopolitan, a 255-unit building in the Lowertown area of downtown St. Paul. That deal closed in January.

Village Green still has interests in 6 local apartments. The company’s latest project, the 213-unit Eitel Building City Apartments, opened in January near Loring Park in Minneapolis.

“Eitel has performed very well. I think we’ll be at 95 percent occupancy at the end of the month,” Roebker said.

Village Green also plans to develop the 175-unit Mill District City Apartments in downtown Minneapolis along Washington Avenue near the Guthrie Theater on which another developer once planned condos. Construction is slated to start this winter.

Dingman said that apartment investors see the Twin Cities apartment market as stable, with lower vacancy than other cities.

“Our market is very stable,” Dingman said. “There’s definitely a demand for multifamily in the market.”

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