Sale pending: 4 Eleven Lofts student high-rise in Ann Arbor under contract to Texas investors
A Texas company is weeks from buying 4 Eleven Lofts in downtown Ann Arbor, marking the first sale of one of the city’s newer high-rises.
The Dinerstein Companies of Houston has the building under contract, an official confirmed.
“It is our goal to close (on the sale) by the end of the year,” said Brian Dinerstein, who is in charge of new business development for the company.
“We love Ann Arbor,” he added. “We’ve tried for a number of years to do business in Ann Arbor.”
Developer Joseph Freed & Associates built 4 Eleven Lofts, opening it to the market in fall 2009. It’s located at the northeast corner of South Division and East Washington.
The building is one of three downtown Ann Arbor high-rises built during the rush to develop during the past 10 years, a time when multiple proposals calling for hundreds of new units that were expected to bring thousands of new residents downtown.
Freed also built a second high-rise in that group: Ashley Terrace, which had been targeted for foreclosure earlier this year by Freed’s lender on the project.
Dinerstein said the pending deal to acquire 4 Eleven Lofts is with Freed directly and not a lender. A purchase price is not available.
The building is assessed at $15.1 million, making it the 11th largest taxpayer in the city, according to assessor records.
Freed, Dinerstein said, “has been great to work with.”
4 Eleven Lofts is on the northeast corner of East Washington at South Division.
Melanie Maxwell I AnnArbor.com
Freed’s finances have been in the news over the past year as the Chicago-area developer struggled to complete some major projects during the downturn. While some lenders have worked with the company, Bank of America has not - leaving the future of buildings that Freed financed with that lender uncertain.
In Ann Arbor, Ashley Terrace appears to remain caught in that situation. The company also received city approvals to build Glen Ann condos near Glen and Ann streets; a proposal to extend site plans there is pending.
Yet in finding a likely buyer in Dinerstein, Freed has have found an apartment operator eager to enter the fast-changing Ann Arbor student housing market.
“We love the asset,” he said. “We like the look and the feel of the location, the tenant mix, everything about it.”
The building had 96 units with 343 bedrooms, according to industry research. The average rental rate per bed is $862 per month, yielding monthly rental income of $294,804. The rate per bed is second in the market to Zaragon Place, the third high-rise to conclude construction downtown; it averages $1,119 per bed per month in rent.
The building also has first-floor retail space, where Subway will be the first tenant.
The purchase fits Dinerstein’s ongoing investment and development of student housing, Dinerstein said.
The company operates an apartment management division and a student housing division called Sterling University Housing, which includes development and management.
The corporate web site lists eight current properties in six states in the student housing portfolio. Since 1997, the company has developed 37 properties and managed 20,000 beds.
Dinerstein has sold properties in Kalamazoo, East Lansing and Mt. Pleasant, Brian Dinerstein said.
“This is our entry into the (Ann Arbor) market,” he said of the pending 4Eleven Lofts purchase.
Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.
Comments
jondhall
Sat, Nov 20, 2010 : 10:05 a.m.
Thank the Texans for investing here. With the US Senators we have wonder we still have statehood. How is that Levin & Stabenow, were still in the lead number 50 of 50, keep up the good work, the liberals will reelect you. Such a blind shame, reminds me of how Coleman Young tore down Detroit. No vision for tomorrow, take all you can today. Someday I will live in Texas where they still have common sense.
b master b
Sat, Nov 20, 2010 : 9:08 a.m.
Veracity, Freed is out of Chicago so none of the revenue came here anyway. For a very small fee the buyers can select to have the purchase price recorded at $1 so the public will not find out the price
MI-expatriate
Sat, Nov 20, 2010 : 2:10 a.m.
"While some lenders have worked with the company, Bank of America has not" - there's a quote worth repeating. Bank of America is almost universally despised in the real estate community. On the bright side, the reason out-of-state companies are investing here is because they see that we have hit bottom and are rebounding, at least in Washtenaw County. We are our own worst enemies regarding property values and our relative stability in the state of Michigan. Now if our Washtenaw homeowners would see the same, we could probably pull up market values considerably. The bank properties and short sales that appraisers must factor in are not helping. Some sellers with equity must get in the game, please, for the good of the county. They might not get their ideal price from 2004 or so, but they probably will not lose their shirts.
UofMWolverine
Sat, Nov 20, 2010 : 1:02 a.m.
I am currently living in 411 lofts and it is the most poorly managed building I have ever seen.
Veracity
Fri, Nov 19, 2010 : 11:49 p.m.
When the Dinerstein Companies purchases 4 Eleven Lofts please post the sale price for comparison with the assessed valuation. The old term "dirt cheap" comes to mind with this economy. After the sale, all the revenue and whatever profit is produced will go to Texas whose economy is already significantly better than Michigan's. Another old saying comes to mind: "Money goes where money is." At least Ann Arbor will receive increased tax payments....ah, won't it?