April 23, 2019
LEM Capital Closes $14.6 Million Joint Venture Transaction in Eagan (Minneapolis), MN
LEM Capital closes $14.6 million joint venture transaction in Eagan, MN
Philadelphia, PA – LEM Capital, L.P. (“LEM”) has closed on a $14.6 million joint venture investment for the acquisition and renovation of Cedarvale Highlands (“Cedarvale” or the “Property”). Cedarvale is a three-story, 108-unit apartment community located in Eagan, MN, one of suburban Minneapolis’ most desirable submarkets offering robust median incomes, high median home values, a strong public-school system and substantial barriers to entry for new construction. The Property has direct access to the major I-77 and I-35E motorways, which connect to the region’s most important job hubs including the Minneapolis-St Paul International Airport, the Mall of America and the downtowns of Minneapolis, St. Paul, Eagan and Bloomington. The Twin Cities is home to the headquarters of eighteen Fortune 500 companies and the region’s highly educated population and anticipated corporate expansions are projected to drive job growth going forward.
The Property was acquired from a private owner and offers physical and management upside. The seller has invested in the Property to minimize deferred maintenance but has not spent money on substantial amenity or common area improvements that would appeal to tenants. The seller has executed light upgrades on 52 of the 108 units and is achieving strong rental premiums. The business plan contemplates upgrading all unit interiors, improving curb appeal and common areas, refreshing the landscaping, renovating the existing amenities and building a fitness center. LEM’s operating partner will utilize a more professional approach to property management and marketing and institute market-level utility reimbursement charges and garage fees. On a post-renovated basis, the Property should attract the area’s many blue/grey collar workers who desire professionally managed, high quality apartments in an accessible location.
“We are very excited about the opportunity to acquire a well-built property in a desirable suburban neighborhood with high barriers to entry,” said Joshua Grossman, a senior vice president at LEM. “Our business plan anticipates generating value for our investors by creating a property that offers tenants modern finishes and enhanced amenities in a submarket with limited apartment stock.”