After a sale was negotiated for The Annex of South Bend apartment complex, buyer HPP Equity in its due diligence identified issues with the building stemming from deferred maintenance that could cost as much as $1.3 million to address. Then, the day before the sale was to close, a small fire broke out in the building, causing smoke damage on one floor.
Despite these challenges, the sale closed in November on the five-story, 66-unit, 133-bed apartment complex at 1106 South 20th St. in South Bend, which is adjacent to Indiana University South Bend.
The complexity of the project and the perseverance of the players on both sides earned the apartment complex a 2023 CoStar Impact Award, as judged by real estate professionals familiar with the market.
The buyer and seller resolved the additional complexities stemming from the costs of repair, and the property has been under HPP Equity's ownership for several months. Significant process has been made on improvements.
"Extensive negotiation between the buyer and seller took place over a seven-month period," according to broker Dan Skodras, senior vice president of the Bradley Company, which facilitated the negotiations. "The negotiation also involved the work of some contractors and consultants to provide effective solutions for the deferred maintenance items that were satisfactory to both the buyer and seller. A small fire causing some smoke damage on one floor of one of the buildings took place the day before closing was scheduled, which added to the complexity of the deal and needed to be resolved."
The property is achieving significant progress with occupancy while addressing deferred maintenance and improvements. During the COVID-19 pandemic, the complex struggled with low occupancy due to students going home amid a temporary transition to online classes.
About the project: The Annex of South Bend apartments complex was developed on 1,159 acres at 1106 South 20th St. in South Bend, Indiana. The property, featuring 66 units in five stories, was sold Nov. 4 and developers are addressing approximately $1.3 million in deferred maintenance.
What the judges said: "This is a building that has needed investment for quite some time. This building plays an important role for student housing and provides a living option not readily found near the Indiana University South Bend campus," said Tim Corcoran, director of planning and community resources, Community Investment, City of South Bend.
They made it happen: Senior Vice Presidents Dan Skodras and Michael Drew of the Bradley Company.