A 45-acre block off University Drive at Independence Drive and Lancewood Drive will be revitalized in a $27 million acquisition by Philadelphia-based Penn Capital, an integrated private investment company.
The company has purchased the former GuestHouse Suites from the Huntsville Hospital Foundation as part of the acquisition. The project includes renovating and redeveloping three properties along University Drive across from the University of Alabama in Huntsville.
In addition to the former GuestHouse Suites at 4020 Independence Drive, Penn Capital is revitalizing the former North Ridge Apartments and the Continental Apartments adjacent to it. The project totals 458 apartments along University Drive and creates a 45-acre “super block” of 546 apartments. It is strategically aimed at revitalizing the surrounding community, which has suffered from blighted conditions over the past 10 years.
According to Penn Capital founder Ed Rogan, the properties fit the company’s investment strategy to invest in Sun Belt markets from Texas to Florida where there is tremendous economic growth.
Penn Capital wanted to come into Huntsville, he said, because of the job growth around the new Toyota production plant, and the aerospace and military presence.
“We look for projects in good areas or even areas that have had some distress issues like these three properties,” Rogan said. “A lot of people would have passed on this project because it isn’t visually appealing, but we have a vision where our work revitalizes the community and surrounding neighborhood and improves the standard or living and quality of life for people.”
Just two miles east of the MidCity Huntsville project, the former North Ridge Apartments complex has been renamed Madison Grove. It consists of 105 buildings and 390 apartments, all two-story townhouses.
“The buildings are in good condition, well built in the mid-1960s,” Rogan said. “They have solid foundations and great structures, but it had become known for a lot of crime.
“We came in and secured the premises by putting up a fence and security cameras to keep out trespassers, put in new lighting to light up the grounds, and the police department hired off-duty police officers to patrol the property. Then we began work improving and upgrading the exterior façade and doing some landscaping to give it curb appeal.”
Rogan said they are working with Huntsville’s Blue Star Crime Free Multi-Housing Program to help residents, owners and the managers of rental properties to keep drugs and other illegal activity off their property.
“We are also renovating the interiors with all new appliances and the amenities required to take it from what was a D-class property with a lot of crime, deferred maintenance, and poor living conditions, to a safe and attractive Class-A property for middle class families,” he said.
Rogan said the property did not come without some challenges, however.
“Because of the age of the property, the structures are not up to today’s building codes and even the electrical infrastructure needs to be rewired,” he said.
But, they are working with the city to upgrade it.
“We have the same interests in that revitalization will increase the tax base tenfold, increase the quality of people living there, and create a safer living space,” Rogan said.
Penn Capital is doing the same with the Continental Apartments, which they have renamed The Ave. It is a two-story, 88-unit apartment community consisting of 66 studios and 22 two-bedroom/two-bath apartments.
“The Continental and hotel are vacant, so we have been able to move quickly to replace all the roofs and windows,” Rogan said. “We are doing a complete redevelopment with new exterior facades and landscaped grounds. It will have high quality, Class-A finishes that will attract higher-end tenants.”
He said the Continental is a unique building from the mid-1960s which was built to house visiting generals and high-ranking military officers who were visiting Redstone Arsenal.
He said they are well built with a good strong infrastructure, structural concrete and steel girders in the ceilings that can be used to increase ceiling height and create trendy styles like exposed-beam ceilings. It will become a smart property, fully outfitted with WiFi and a great opportunity for housing students and families.
Penn Capital plans to invest $5 million to redevelop the aging hotel at 4020 Independence Drive. The original extended-stay already has kitchens that will lend themselves well to studio apartments – a good fit for college students.
“The hotel has a 5,000 square-foot lobby on the first floor that we are renovating and putting in an exercise center, leasing office and clubhouse with a new swimming pool, outdoor kitchen and dog park,” Rogan said. “On the second floor, they are putting in a new shared workspace so people living in the surrounding complexes can come there and use the business center.”
Rogan said the work is expected to be completed on all three properties in about 10 to 12 months and a ribbon-cutting for all three is planned in about 18 months.