Doran Cos. sold four student housing buildings at the University of Minnesota to an institutional investor Monday, making space on its roster for new properties including a major land purchase in Maple Grove.
Developer Kelly Doran said his company has an agreement to buy the final 40 acres of developable land at the Arbor Lakes district near the northeast corner of the Interstate 694/494 intersection.
"We thought we had a lot of investment in a single area, so we are diversifying our properties by pulling them out of the [university] area and putting them somewhere else," Doran said.
Terms of the U housing sale were not disclosed, but it marks the end of the company's five-year building spree near the main campus.
The sale involved Sydney Hall, the apartment complex named for Doran's daughter that he opened in 2010. It also included Dinkydome, a former Bible college that Doran purchased and redeveloped. Both are on 15th Avenue SE.
The other two properties in the transaction are 412 Lofts, on 12th Avenue SE., and the Edge on Oak, on SE. Oak Street.
The company continues to own and manage two newer apartment buildings near the U, the Knoll and the Bridges, both on University Avenue SE.
"I think there is some overbuilding on campus. I'm not saying we turned a blind eye to that, but it wasn't our primary motivation for selling," Doran said.
Cushman & Wakefield/NorthMarq's Lance Steiger partnered with Byron Moger to sell the properties. University Communities, a Denver-based money manager, represented the out-of-state buyers.
In Maple Grove, Doran is going to buy the sizable property outright without getting city approvals for its future use. Hennepin County valued the parcel at $3.77 million, according to property records.
"We are going to close on it quickly and we are not in any rush to get city approvals," Doran said. "We don't have any immediate plans, but I'm sure some of the focus will be on residential, and it could have other components as well."
The Francis A. Seleen trust has been trying to sell the property for more than a decade. The trust, managed by Seleen's three grandchildren, Brian Roeder, Bonnie Roeder and Brenda Tuttle, encountered various stumbling blocks with each new developer's attempt. Opus Development Co. recently bailed on its plans for the site, dubbed the Point at Arbor Lakes, after facing considerable pushback from city planners.
"We've been to this rodeo so many times before, and it's just horrible," Brian Roeder said, referring to the city approval process. "We won't go down that road again. If someone wants to develop it, that's fine, but we don't want to involve the city. We just want a buyer and seller, and then they can go to the city later."
Al Madsen, Maple Grove city administrator, said Doran visited the city office Tuesday.
"He says that he doesn't know what he will do with the property but just wanted to introduce himself to city staff," Madsen said.
The north portion of the 40-acre site, zoned for high-density residential, hasn't been a problem, but the parcel's south 24 acres is "where developers have wanted to do something outside of the guide plan," according to Madsen.
"We would like to see more office on that site, [but] the developers say the office market stinks," Madsen said. "We didn't budge for Opus, so I can't imagine the council changing."
For Doran, the campus sale also frees up funds for other investments, including the purchase of an office-industrial complex in Hopkins, with plans to redevelop into apartments, and a new 500-room apartment complex in Brooklyn Park. Both are in the early stages and are near proposed future light-rail stops.
"We are in the planning stages of close to 1,500 new apartment units," he said.
The company is currently developing and building the second Mill & Main complex in the Marcy-Holmes neighborhood, which is across the Mississippi River from downtown and across Interstate 35W from the U.
Doran also is one of three remaining competitors bidding on the city of Minneapolis' high-profile Nicollet Hotel Block redevelopment project downtown. There, he has proposed building a 30-story cylindrical tower and a six-story boutique hotel.