A joint venture between a local hotel operator and the owner of three downtown apartment buildings is bringing an extended-stay hotel to the west side of White River near IUPUI.
Bloomington-based Pinnacle Asset Management and Indianapolis-based Dora Brothers Hospitality Corp. purchased Riverpointe Apartments in June. The partnership plans to convert the north tower of the two-building complex into a 143-room Candlewood Suites, said Dora President Timothy Dora.
The south tower will remain apartments, but will be extensively renovated, said Pinnacle President Robert McCormack.
Including acquisition costs, the partnership plans to spend $20 million on the renovation and conversion.
The apartment complex is about 70-percent occupied, McCormack said. Residents of the north tower are being given the option of moving to the south tower when their leases are up.
Riverpointe's proximity to the IUPUI campus and the Indiana University Medical Center attracted Dora and Pinnacle to the property, even though downtown redevelopment has largely left the west side of the riverbank untouched.
"The target site for Candlewood is the five hospitals and the university," Dora said. "We'll see if jumping across the river is crazy."
Riverpointe, at 1150 N. White River Parkway W. Drive, is adjacent to Rev. Mozel Sanders Park to the north and Haughville to the west. A bus route and the White River Wapahani Trail, recently upgraded with lighting and emergency call boxes, connect Riverpointe to the IUPUI campus.
The partners are betting Riverpointe's twin 12-story buildings will get them in on the ground floor of redevelopment in the area.
There should be plenty of demand, McCormack said, noting IUPUI's student enrollment growth and the planned expansion of the Indiana Convention Center and a new stadium. "We feel like we're catching it on the upswing."
On the apartment side, local multifamily broker John Sebree predicted Riverpointe will have few problems attracting tenants once the renovation is complete. Downtown apartment occupancy has consistently been higher in the past few years than in any other part of the Indianapolis area, he noted. In the most recent quarter, the downtown occupancy rate was 95.2 percent, compared with 91.7 percent in the city overall.
"Property that far west is going to be considered a bit less desirable in location than a property on the [Central] Canal, for instance," said Sebree, a broker in the local office of California-based Marcus & Millichap. "That was obviously taken into consideration when they bought the property and put the pro forma together. ... Riverpointe's not going to be as high [rent] as the Canal, but there's a substantial need for students who can't afford to be on the Canal."
Marcus & Millichap listed Riverpointe for the previous owner, locally based Collegiate Housing Services Inc. Most of the seven offers to buy the property were from companies specializing in student apartment housing, Sebree said.
Pinnacle owns the Plaza, Lockerbie Court and Harness Factory Lofts downtown, plus six complexes in other parts of the city. Dora owns the Best Western and Comfort Inn downtown, in addition to 13 hotels from Fort Wayne to Columbus.
Dora's Comfort Inn is within the footprint of the planned stadium for the Indianapolis Colts. The company has a relocation agreement for the Comfort Inn, but a deal on a new location is pending the conclusion of lease negotiations between the city and the Colts, Dora said.
Collegiate had owned Riverpointe for several years, targeting students from Lincoln Technical Institute and other area sch
ools. Before that, the complex, built as public housing in the 1960s, struggled through the years.
In 1996, Jerry Neal, the father of Collegiate President David Neal, was punished by the National Association of Securities Dealers for allegedly violating securities laws while selling shares in an entity that was to raise $4 million to renovate the complex.
New owners plan to bring a Candlewood Suites extended-stay hotel to one tower of the 284-unit Riverpointe Apartments on White River Parkway.