The developer of downtown's Cosmopolitan on the Canal apartments is nearing a deal to sell a stake in the building to an investor in a move that could free up capital to launch a $24 million second phase.

Locally based Flaherty & Collins Properties is working on a deal that would bring in an out-of-state institutional investor as an owner/partner, said CEO David M. Flaherty. He declined to name the investor or offer any details of the deal including price, citing a nondisclosure agreement. He said Flaherty would continue to manage the property.

Flaherty said there's no shortage of investors for "multifamily urban infill" projects like the Cosmopolitan.

"It creates interest among players that may not normally have an interest in Indianapolis," Flaherty said. "People are looking at our city that may not have looked at it in the past."

The investment won't necessarily be tied to a second phase for Cosmopolitan, but that is a possibility, Flaherty said.

Flaherty & Collins in June hired the local office of CB Richard Ellis to begin marketing the property without an asking price, seeking either to sell it outright or to bring in an equity partner.

The 218-unit apartment community has a parking garage and ground-level retail. The project—which is bordered by the Central Canal, Senate Avenue, Michigan Street and North Street—cost more than $33 million to build.

Flaherty & Collins already owns the adjacent, triangle-shaped parcel bordered by Michigan Street and Senate and Indiana avenues, and has developed plans for 162 additional apartment units and 5,365 square feet of commercial space

Offering materials noted the Cosmopolitan's upscale health and fitness center, yoga and pilates studio, salt-water infinity pool and grilling area, indoor/outdoor aqua lounge and attached parking garage with 342 spaces.

It says about 10 percent of residents earn more than $150,000, and "numerous" residents earn more than $500,000. Another selling point is the potential for rent growth of 6 percent or more per year, given the high demand for Cosmopolitan apartments.

Flaherty has been bumping up monthly rents, which range from $1,000 to $2,500, as terms expire, and would charge more initially for new units in a second phase, Jim Crossin, the company's vice president of development, told IBJ in February.

The first phase of Cosmopolitan had been set for completion by 2009, but a devastating fire in March 2009 delayed the opening by about a year.

The 16,000 square feet of commercial space on the first floor of Cosmopolitan has been less of an overnight success, though the branding and advertising firm Three-Sixty Group agreed in February to take about 5,000 square feet and move from its current home in the Century Building.