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A downtown Indianapolis luxury apartment building has been sold to an out-of-state firm for $50 million.
The Cosmopolitan on the Canal, 301 W. Michigan St., was acquired April 1 by Washington, D.C.-based PRP Real Estate Investment Management, marking the company’s first acquisition in the central Indiana market.
The 218-unit Cosmopolitan, which was completed by Indianapolis firm Flaherty & Collins Properties in 2010 at a cost of more than $33 million, was one of the first upscale apartment properties along the Canal Walk.
The property was acquired from Canal Senate Apartments LLC, a holding company for an undisclosed firm. The Indianapolis office of Maryland-based real estate brokerage Walker and Dunlop carried the listing for the property, but declined to share the seller’s details, citing confidentiality agreements.
The property was listed with an asking price range of $50 million to $52 million, said Steve LaMotte, managing director for the firm’s local office.
About 20 offers were put in for the Cosmopolitan, he said. That’s compared to 35 the firm had for the Solana property on the north side, which sold to Gray Capital last year for $68.25 million.
“There’s still a little more capital demand for suburbs versus the urban core, but we were very pleased with seeing 20 groups show up and make bids on the asset,” LaMotte said. “It’s a strong endorsement for Indy and how investment capital views our market.”
Walker & Dunlop represented both the seller and buyer on the purchase.
Matthew Serenius, director of PRP’s multifamily division, said the company’s move to acquire the property was underscored by its proximity to the $4.3 billion Indiana University Health campus now under construction to the north, and the split of the former IUPUI campus last year.
He added that Indianapolis’ rank as one of the best markets in the country for rent growth—that is, increases in rent prices—played a key role, too.
In March, Indianapolis came in at No. 6 nationally for rent growth, with a year-over-year increase of 3.2%, according to figures from Yardi Matrix, a commercial real estate data and research firm. The city came in only behind New York City (5.5%); Chicago (3.7%); Kansas City, Missouri (3.7%); Columbus (3.5%) and Philadelphia (3.2%).
“Over the last few years, it has outperformed the U.S. average in rent growth, and moving forward, there are projections that will continue,” he said.
Currently, rent at the Cosmopolitan starts at about $1,250 and goes up to more than $2,500 for some units. The average unit size in the building is also higher than most other comparable properties in the downtown area, at 974 square feet, compared to 883 square feet.
The property is the third to be added to PRP’s current multifamily portfolio, with the company looking to grow its reach in the market in the coming months.
At one time, PRP owned apartment buildings comprising more than 4,000 units across the country, but shifted its focus to other areas like office and manufacturing. Overall, the company now has $5 billion in assets under management.
Serenius said while Cosmopolitan on the Canal will continue to be managed by Flaherty & Collins—as it has since opening—PRP is set to renovate the property and will take an active role in management. He did not share the planned investment amount for upgrades, but said it will consist of improvements to unit interiors, as well as common areas and building amenities.
The building is about 97% occupied and has about 16,000 square feet of commercial space on its first floor. It also features a health and fitness center, yoga and pilates studio, salt-water infinity pool and grilling area, indoor/outdoor aqua lounge and an attached parking garage with 342 spaces.
Cosmopolitan was originally set to open by the end of 2009, but a fire at the building in March of that year delayed its opening.
The acquisition by PRP may not be its only planned investment in central Indiana. Serenius said the company is looking at other properties downtown, as well as in the Hamilton County suburbs.
He said the company is “aggressively looking for opportunities in the Midwest and on the East Coast.”
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