Biggest renewal complex for sale

Bank of America to sell a majority stake in west side's Centerpoint

June 21, 2006|By LORRAINE MIRABELLA | LORRAINE MIRABELLA,SUN REPORTER

The biggest privately developed housing and retail project to be completed in Baltimore's west side renewal is up for sale, owners of the Centerpoint complex said yesterday.

Centerpoint, which Bank of America began developing on a full city block at Howard and Fayette streets in 2002, was one of the earlier and bolder initiatives to revive the city's traditional retail district.

Together with the refurbishment of the Hippodrome Theatre, now a venue for national tours of Broadway shows, it has been a key in the effort to infuse new life into what had become a depressed area.

"If the Hippodrome was alone, that would not have changed the character of the west side," said M.J. "Jay" Brodie, president of Baltimore Development Corp., the city's economic development agency. "Centerpoint and the Hippodrome together have changed for the better the character of the west side."

The bank's Community Development Corp., which invests in struggling urban neighborhoods, is actively marketing the 392-unit complex to institutional investors and pension funds, said Greg Barnard, a spokesman for the bank.

The complex consists of an apartment tower and 11 other mostly historic and rehabbed buildings.

A sale would fit the bank's strategy of completing such projects, then selling them to reinvest in other, similar projects, Barnard said.

The bank, known as an aggressive developer of projects in under served neighborhoods, has developed and sold about 20 development projects in the past 12 years. "Our role is to be an agent for change, not a long-term property owner or manager," Barnard said.

Centerpoint has spurred more development in the area, giving confidence to entrepreneurs, smaller developers and new residents, said Ronald M. Kreitner, executive director of Westside Renaissance Inc.

"It was a complicated project, but a very bold project," he said. "This project was a big step in the marketplace in terms of creating a critical mass of residential development."

Most large banks have been active in investing in neighborhoods in need of redevelopment - spurred by requirements of the Community Reinvestment Act - but it's more unusual for a bank to act as the project's developer, said John K. McIlwain, a senior fellow for housing with the Urban Land Institute in Washington.

"Bank of America's CDC is one of the biggest and most active in the country, and it has been since it was NationsBank," said McIlwain. "It has traditionally had a strong staff that has the skills and the support from headquarters to do this."

The bank finished Centerpoint this spring after several delays and at a development cost of an estimated $90 million. The apartments, which have been popular with students and workers from the nearby University of Maryland's medical and graduate school campus, are 80 percent leased with monthly rents ranging from $831 to $1,550. Filling about half the ground-level retail space are shops such as Starbucks and 7-Eleven.

The bank hopes to sell its majority partnership to a company with expertise in managing mixed-used projects. It would retain an equity stake of about $14 million - the amount of the bank's investment in federal tax credits - in the project, Barnard said.

"The investment apartment market is extremely healthy," said William S. Roohan, vice chairman of CB Richard Ellis in Baltimore, the realty firm marketing the project for the bank. "We've had an enormous amount of interest in the property."

Investors have become increasingly drawn to multifamily properties because demand for apartments is expected to be strong as rising mortgage rates push potential homebuyers back into the rental apartments, said John P. Lin, president of CapStar Commercial Realty, a Rockville brokerage with clients in Maryland, Virginia and Washington.

"From investors' point of view, this will create extra income," said Lin, who said mixed use projects in downtown areas will likely thrive.

"That type of Main Street retail with apartments on top creates a comfortable living environment. People don't have to drive. They can go out to eat and shop all in one block. ... This is a trend we're going to see more of in the city," Lin said.

lorraine.mirabella@baltsun.com

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