Walnut Commons in downtown Chattanooga is being sold.A 100-unit apartment complex that opened last year in downtown Chattanooga is slated for sale to a Nebraska company for about $15 million - reportedly the most ever paid per unit for such a property in the city.
The planned sale of Walnut Commons is one of an array of apartment deals in Chattanooga in the past couple of years, many bought by out-of-town investors, totaling well over $100 million.
John Clark, a partner in locally based seller Walnut Commons LLC, said Wednesday that the ownership group is finalizing plans to sell the Walnut Street at Aquarium Way site that also holds a Little Miss Mag Early Learning Center.
"We're happy with the way it turned out," he said about the four-story development that cost more than $11 million to build and was the largest apartment complex to go up downtown in more than a generation.
Marcus Lyons, a Chattanooga real estate broker who specializes in apartments, said the sales price would be the most ever paid per unit in the city.
"This truly is a trophy property," said Lyons, who brokered the deal. "The combination of location, quality of development and access to inexpensive debt are the major factors that played a part in the price push on this transaction."
The planned buyer is APRO II at America First Real Estate Group of Omaha, Neb. This summer, America First bought the Bread Factory Lofts on Chattanooga's Southside for $2.7 million from a Clark company. In 2012, it purchased Standifer Place Apartment Homes, a 240-unit complex on Jenkins Road for $25.3 million.
Jack Cassidy, APRO II president, said in Chattanooga that company officials like the Scenic City's downtown a lot.
"We've seen the transformation of downtown," he said, adding that the company never would have made the Walnut Commons deal a decade ago. "Walnut Commons is a pretty good location."
Cassidy said the company sees Chattanooga as "a smaller version of Nashville," where the company also has real estate interests.
"We like the growth story in Tennessee and Chattanooga," he said.
Kim White, who heads the nonprofit development group River City Co., said downtown Chattanooga is on a list of cities with housing shortages.
"We are visited by developers wanting to be in this market," she said.
Lyons said that his company, Lyons Group, has brokered more than $50 million in multi-family real estate transactions alone in downtown Chattanooga over the past 24 months.
Clark said Walnut Commons is 100 percent leased, though the project was originally proposed in 2006.
"Building downtown is difficult," he said.
In 2006, developers eyed condominiums at the site owned by a city entity. But negotiations with the city took longer than expected. Developers wanted the city to give them the land to help the project work financially, but the city balked at the idea.
As condo construction downtown mushroomed, the developers struck a deal in late 2007 to build apartments. The city panel gave the group a 35-year lease with the option to buy the vacant 1.5-acre site. However, the nation's recession also slowed the project.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.