The Sonnet Cove Apartment complex on Laketower Drive was once plagued with criminal activity and bedbug infestations; about half the 340 units were condemned by the city.
Now the complex is being redeveloped into luxury apartments, half-million dollar townhouses in a gated community and a high-end apartment building geared toward empty nesters.
Real estate developer Allen Schubert, a Lexington native who lives in Louisville, bought the complex in March 2011. It was built in the 1970s.
"This is definitely a success story," said David Jarvis, the city's director of code enforcement.
Jarvis said his inspectors had condemned about half the units for faulty plumbing, water leaks, sewer backups and structural problems on balconies.
Improvements started in June of last year as part of a three-phase project to redevelop the 16-acre site.
Six apartment buildings with 140 units were razed. Units in the remaining five buildings were totally refurbished to become condominiums with individual electrical, plumbing and air conditioning systems. The apartments are furnished with stainless steel appliances, washers and dryers and granite countertops in the kitchen and bathroom.
A fitness center was added, the clubhouse was remodeled and a salt-water swimming pool has been installed.
"We did everything up nice because someday they will be condos. There's just no market for condos now," Schubert said.
The one-bedroom units have 940 square feet; the two-bedroom units, 1,200 square feet; and the three-bedroom units, 1,400 square feet. Apartments went on the market in the spring at rents ranging from $879 to $1,300.
"The units are huge because they were built when nobody cared about energy savings," Schubert said. This portion of the development is called Lakewood Park apartments.
Schubert, 57, grew up not far from Laketower Drive. His father was the late Lexington architect Richard Schubert.
After college, Allen Schubert lived in Houston, where he was a developer until he retired in 2006 and moved to Louisville. Three years ago, he got back into developing multi-family projects with his business partner of 30 years, John Knapp. This year they converted a high school in Bowling Green into apartments targeting Western Kentucky University students.
Schubert said he had his eye on the Sonnet Cove complex for three years before he had a chance to buy it.
The complex was sold at a Master Commissioner's sale on Nov. 22, 2010. The mortgage holder, Bank of America Commercial Mortgage, paid $6.6 million. Bank of America sold it to Schubert for $4.7 million.
Dr. David Stephens, who lives on nearby Edgewater Drive, said neighbors have been pleased with changes Schubert has made.
"Allen had decades of experience in Houston, and he's investing that in Lexington," Stevens said.
On the rest of the 16-acre Sonnet Cove property — where the six apartment buildings were razed — work has started on phase two. Construction will start in December on seven townhouses to be priced starting at $500,000.
Amenities will include 10-foot ceilings and space in each for an elevator. Interiors will be finished by the owners, said Robert Trujillo, vice president of development for Schubert's company, Andover Management Group.
The water's edge has been cleared of brush and dead trees so each townhouse will have an unobstructed view of Reservoir No. 2.
"Where else inside New Circle Road can you be in a high-end townhouse on the lake?" Trujillo said.
The final phase of redeveloping the Sonnet Cove property will be a multi-story luxury apartment building targeted to older individuals, Schubert said.
When completed, the entire project will be a $40 million to $50 million investment, he said.
Fifth District Urban County Council member Bill Farmer, whose district includes Sonnet Cove, said the redevelopment has been "a big plus for the community. It's had a very positive impact on the nearby neighborhoods and their property values."
Kevin Atkins, chief development officer of Mayor Jim Gray's staff, said Schubert's project is an example of the kind of in-fill projects the city would like to see done more often.
"We talk about in-fill. Here is a developer who took existing, dilapidated structures, redid them without using up more land capacity and increased the city's tax base," Atkins said. "It's a big plus for the community."
Beverly Fortune: (859) 231-3251.Twitter: @BFortune2010