"Apartment conversion planned for vintage building on LRT line
Posted: 2:30 pm Mon, October 25, 2010
By Burl Gilyard
By Burl Gilyard
Jim Stolpestad and other investors put together the Ironton Asset Fund LLC about a year ago with the goal of buying distressed real estate.
Now, Ironton has closed its first deal, buying the vintage Chittenden & Eastman Building along University Avenue in St. Paul. Stolpestad said the plan calls for converting the building to market-rate apartments.
“It was about as distressed as you could get. There were multiple loans in default,” said Stolpestad, founder and chairman of St. Paul-based Exeter Realty Company and chief executive manager for Ironton Asset Fund, an affiliate of Exeter.
The seven-story building at 2402-2414 W. University Ave. dates to 1917 and sits within the University-Raymond Commercial Historic District. The building is about 132,000 square feet.
“It could accommodate roughly 100 to 105 units depending on the layout,” Stolpestad said.
The property is at the western edge of St. Paul, near the border of Minneapolis and the intersection of University Avenue and Highway 280. The property will be just steps away from the future Raymond Avenue Station on the Central Corridor light rail transit line.
“It’s got a lot of potential. For various reasons, the potential hasn’t been realized. Light rail is bound to make a huge difference over time, so we think this is a good play,” Stolpestad said. “We were just fortunate to be able to put the pieces together. It’s a great building with great bones.”
Stolpestad said the building has approximately 30 tenants on month-to-month leases, primarily small office tenants and artists with studio space. He said they would like to start construction on the conversion of the building next spring.
Stolpestad said the property should be eligible for state historic tax credits, a new finance tool for developers to supplement federal historic tax credits. The new state tax credits were part of the Minnesota Jobs Stimulus Bill, which Gov. Tim Pawlenty signed in April.
“The tax credits are really important,” Stolpestad said. “I’m not sure anyone has actually completed a state tax credit deal yet. … Hopefully, it will work as it appears to.”
The sale closed Oct. 15. Stolpestad declined to say what the group paid for the property, but said “it was a lot less than the seller was asking.” The property had been listed for $3.7 million.
Property records list the previous owner as St. Paul-based J&A Properties Group.
Julie Lux, associate vice president with the Minneapolis office of Cassidy Turley, brokered the sale of the building.
“There was a lot of initial interest,” Lux said. “After the state historic tax credits passed in April of this year there was heightened interest, but at that point we already had the building under contract.”
The $10 million Ironton Asset Fund was put together to acquire “operationally distressed” real estate. But despite the increasing number of distressed commercial properties, many investors aren’t finding much to buy.
“That has been an issue. In our case, we were fortunate to find this,” Stolpestad said. “It’s tough to find things. The whole distressed real estate scene has developed more slowly than a lot of people thought it would. That’s been our conclusion, anyway.”
Ironton has already tapped the Minneapolis-based BKV Group as the architect for the project.
“BKV did the work on the Carleton Lofts, so they’ve got good experience with the area,” Stolpestad said. The nearby Carleton Artist Lofts were industrial buildings converted in recent years into apartment buildings with 169 units.
Chittenden & Eastman Company traces its history to 1866. The company manufactures mattresses. New Jersey-based Eastman House is still in business and produces a line of Chittenden & Eastman mattresses.
The apartment project has no formal name at this point.
“For the time being, we’re just calling it the C&E Building,” Stolpestad said.
Stolpestad said that Ironton is close to putting another property under contract and is looking for more deals.
“We’re on the lookout for other opportunities,” Stolpestad said."
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