IBJNews

Zender nears deal for 16-building apartment portfolio

Scott Olson
November 26, 2013
Keywords
Back to TopCommentsE-mailPrintBookmark and Share

Zender Realty could be close to unloading a portfolio of 16 downtown apartment buildings on the market for more than a year after a previous deal fell through.

The privately owned Zender Family Limited Partnership, an Indianapolis-based property management firm, first listed the buildings—many of them historic—without an asking price in August 2012.

Zender Realty thought it had a buyer and expected to close on the deal earlier this month. But the transaction ultimately fell apart when the potential suitor couldn’t raise the funds, said Tim Zender, who runs the business with his four brothers and sisters.

“It was a little disappointing because of the time we spent [eight or nine months] with the interested buyer,” he said. “It all came down to capital.”

REW Spink building 15colThe Spink Apartments at 1433 N. Pennsylvania St. is among the 16 downtown properties for sale in Zender's portfolio. (IBJ Photo/Scott Olson)

All is not lost, though. Another interested buyer has stepped forward and is under contract to purchase the portfolio. Zender Realty could close on the deal within the next six months, Zender said.

George Tikijian of apartment brokerage Tikijian Associates is listing the portfolio. He said it has attracted some national interest, but the two serious offers have come from local firms.

“It’s a group of properties that are highly desirable because they’re downtown and they’re cool buildings,” he said. “But it’s a tough deal to do. It’s going to require a buyer that has the capital resources to get it done.”

Zender Realty originally listed a portfolio of 18 complexes in 2008 for an estimated $40 million. The Drake at 3060 N. Meridian St. and the Whitestone a block north since have been sold.

The 16 available properties consist of a total of 873 units and are mostly located on North Delaware, North Meridian and North Pennsylvania streets. Some were built in the 1920s—or earlier—and have never been renovated, while others were constructed in the 1950s and rehabbed in the late 1980s. They are clustered downtown and just north of the city center, in areas that continue to experience improving occupancy rates and rising rents.

Downtown apartment occupancy has fallen slightly this year due to the number of new units hitting the market but still is a very healthy 95.4 percent, according to Tikijian’s 2013 Indiana Apartment Market Overview. Overall, the city’s occupancy rate is 92.1 percent, the report said.

Average rent for the metropolitan area grew 2 percent year-over-year, to $718 per month, with downtown rent increasing even more, by 2.3 percent, to $916, according to the report.

At the 48-unit Admiral, built in 1929 at 3025 N. Meridian St., rents range from $615 a month for a one-bedroom unit to $970 a month for a two-bedroom, for instance. Studio or one-bedroom units are only available in many of Zender Realty’s older buildings.
 
The company is willing to break up the portfolio and sell buildings individually or in groups but prefers to sell the entire lot all at once, if possible.

“It does kind of limit your market,” Zender acknowledged. “It’s a big challenge for anyone coming in and trying to take that over.”

Michael Wernke, who leads the multi-family group at Colliers’ Indiana region, said the locations of the buildings make them attractive. But the large amount of new units opening in the downtown market could threaten their occupancy, he added.

“It will be interesting to see, with all the new construction downtown, whether tenants in the Zender portfolio might be inclined to move to newer units under construction,” Wernke said.

Earlier this month, a study from Indianapolis Downtown Inc. downplayed concerns the downtown housing market might become overly saturated with apartment units.

IDI commissioned the survey by the Indiana University Public Policy Institute to track the future of downtown living. The urban core has seen a huge boom in multi-family development as market dynamics have shifted in recent years to support renting instead of buying.

Between 2000 and 2012, nearly 2,000 new rental units were built, according to Tikijian, bringing the total number downtown to about 4,700. But within the next three years, 3,500 additional units are expected to become available.

Zender said the decision to sell is motivated more by personal reasons than by any rush to cash in on the current market. The five partners all want to explore different interests.

The Zenders’ parents, Jim and Grace, are no longer involved in daily operations but have an interest in the portfolio. Jim bought his first apartment building in 1970 and handed the reins to his children about 20 years ago. He remains active in the general partnership.

ADVERTISEMENT

  • Zender
    As a resident of the Old Northside Historic Distric, where many of Zenders Apartments are, we will miss them as owners. They have managed their building well over the years and we hope the new owners do the same.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. By Mr. Lee's own admission, he basically ran pro-bono ads on the billboard. Paying advertisers didn't want ads on a controversial, ugly billboard that turned off customers. At least one of Mr. Lee's free advertisers dropped out early because they found that Mr. Lee's advertising was having negative impact. So Mr. Lee is disingenous to say the city now owes him for lost revenue. Mr. Lee quickly realized his monstrosity had a dim future and is trying to get the city to bail him out. And that's why the billboard came down so quickly.

  2. Merchants Square is back. The small strip center to the south of 116th is 100% leased, McAlister’s is doing well in the outlot building. The former O’Charleys is leased but is going through permitting with the State and the town of Carmel. Mac Grill is closing all of their Indy locations (not just Merchants) and this will allow for a new restaurant concept to backfill both of their locations. As for the north side of 116th a new dinner movie theater and brewery is under construction to fill most of the vacancy left by Hobby Lobby and Old Navy.

  3. Yes it does have an ethics commission which enforce the law which prohibits 12 specific items. google it

  4. Thanks for reading and replying. If you want to see the differentiation for research, speaking and consulting, check out the spreadsheet I linked to at the bottom of the post; it is broken out exactly that way. I can only include so much detail in a blog post before it becomes something other than a blog post.

  5. 1. There is no allegation of corruption, Marty, to imply otherwise if false. 2. Is the "State Rule" a law? I suspect not. 3. Is Mr. Woodruff obligated via an employment agreement (contractual obligation) to not work with the engineering firm? 4. In many states a right to earn a living will trump non-competes and other contractual obligations, does Mr. Woodruff's personal right to earn a living trump any contractual obligations that might or might not be out there. 5. Lawyers in state government routinely go work for law firms they were formally working with in their regulatory actions. You can see a steady stream to firms like B&D from state government. It would be interesting for IBJ to do a review of current lawyers and find out how their past decisions affected the law firms clients. Since there is a buffer between regulated company and the regulator working for a law firm technically is not in violation of ethics but you have to wonder if decisions were made in favor of certain firms and quid pro quo jobs resulted. Start with the DOI in this review. Very interesting.

ADVERTISEMENT