St. Paul has sold the Penfield apartment complex, which cost $62 million to overhaul, to a real estate investment firm for about $65.5 million.
JLL Income Property Trust announced last week that it has purchased the building in downtown St. Paul that houses the 254-unit Penfield Apartments and a Lunds & Byerlys grocery store. But the $65.5 million sticker price doesn't tell the whole story of city earnings from the sale.
St. Paul will end up receiving $8.7 million more than it invested in the site, said Mollie Scozzari, spokeswoman for the city's Planning and Economic Development Department. That return is higher than initial estimates because the city had fewer expenses related to closing than originally thought and it saw higher revenue from operating the building this year, she said. The buyer agreed to assume the city's mortgage, which also saved the city money, Scozzari said.
However, city staff members said the Penfield redevelopment was not just about the earnings; it was a way to trigger other projects downtown.
"Evidence of the investment's success is not just in the multimillion-dollar profits that can now be reinvested into growing jobs and further strengthening our economy, but in the fact that it helped prove the market for real estate downtown and has spurred multiple other redevelopments in the area," Mayor Chris Coleman said in a statement Monday.
The project at 10th and Robert streets has had a remarkable impact on vibrancy downtown, City Council Member Rebecca Noecker said.
JLL Income Property Trust said amenities such as the light-rail Green Line and CHS Field, plus jobs and restaurants in the area, have helped make downtown St. Paul a "millennial magnet location."
"The Penfield's high-quality design, walkable location, and access to employment and entertainment amenities make it an attractive addition to our portfolio," Allan Swaringen, the trust's president and CEO, said in a statement.
The limited supply of new apartments and the low apartment vacancy rate in the area also contributed to the decision to purchase the building, he said.
St. Paul took over redevelopment of the Penfield in 2010, after private development plans fell through during the recession. The city's Housing and Redevelopment Authority (HRA), a U.S. Department of Housing and Urban Development loan and a tax-increment financing district helped pay for the building's overhaul.
The tax-increment financing district will be decertified and the property will return to the tax rolls, Coleman said. Proceeds from the sale will return to the HRA and will be used to fund other city priorities throughout the city, he said.
At his budget address in August, Coleman proposed using $2 million from the Penfield sale to create a job opportunity fund that would give loans and grants to businesses looking to expand or move to St. Paul.