Pennington Place Apartments, a dilapidated complex off Richmond Road near New Circle Road, has been sold to a Florida firm that specializes in fixing up neglected properties.
The sale of the property near French Quarter Square brought cheers from area officials who have been closely watching out for its future. The complex originally was slated to be sold at a foreclosure auction last summer to pay the city for a long list of code violations, but a deal was reached to delay the foreclosure in hopes of finding a buyer interested in repairing it.
"It feels wonderful," said KC Crosbie, who represents the area on the Urban County Council. "It has taken a long time to get there. Personally, I'm thrilled."
The property's buyer is The Barrington Group, a company based in Sarasota, Fla., that has been in the apartment industry for 35 years and owns 15 properties in seven states. Pennington Place, formerly known as English Manor and various other names, is the company's first property in Kentucky.
President and founder Larry Lieberman said the company began purchasing boarded-up properties in the 1990s to convert them to "brand new properties." He said the company doesn't rely on federal subsidies and, as such, charges the market rate for the finished apartments.
The company also is "not just a rebuilder and seller," he said. "We still have the first property we ever built, back in 1975.
"We are buyers, rebuilders, owners and managers. We look at a property not just as what can be done with it currently but how it will perform over a period of years."
Despite its condition, Pennington Place stood out, Lieberman said, because of the area and the eagerness of city officials to work with the company to restore it.
The Barrington Group is having engineering studies done on the 20-acre property and will submit a rebuilding plan to the city soon, he said.
"Our plan is to make the site itself a very pleasant and beautiful place to call home, and that might require the demolition of some buildings," he said. (To see examples of complexes the company has fixed up, go to Barringtonusa.com, click on "Divisions," then click "Apartment RENEW Program" and "Case Study Photos.")
The Lexington complex had about 540 units, but some of the buildings have been burned and might need to be demolished, Lieberman said.
"I don't believe we'll end up with that many units when we're done," he said.
Lieberman declined to discuss the company's plans further, saying he would need up to 45 days before sharing more details, including a proposed time line.
The property sold to The Barrington Group for $2.1 million, but there was almost a deal in 2007 to sell it for more than $10 million, said Ken Silvestri, president of Silvestri-Craig Realtors.
The complex, built in 1970, was purchased in 2005 by Edward F. Streit of Aurora, Ill., for $11 million, according to Property Valuation Administration records. Streit has since died.
Silvestri said he had the deal under contract with a Utah-based firm, but the financing fell apart. At that time, the complex was about 50 percent occupied, and the expenses for heating and air conditioning were running so high it wasn't affordable to continue operating the site, he said.
"It's interesting how far the value has fallen as it's deteriorated," he said.
Since being closed, the complex has become a place for crime and squatters.
"I did a tour through the units, and it's probably too disgusting to even explain," said Crosbie, the councilwoman. "When there's squatters and no working plumbing, you can only imagine what condition those units are in."
The property had been set to be sold at a master commissioner's sale in late June to pay $97,000 that was owed to the city. But TCF National Bank, which held the mortgage on the complex, and the Urban County Government reached an agreement to postpone foreclosure proceedings for six months to give the bank time to find a viable buyer. The Barrington Group purchased the property in mid-December.
Silvestri said the property has potential, but it would come at a high cost. His company's market-research studies of the Lexington apartment scene suggest the area of town where Pennington Place is has an occupancy rate of more than 96 percent.
"But I wouldn't be at all surprised if they're going to have to invest at least $30,000 a door to get the place rehabilitated," he said. "There's some pretty significant damage over there on most of the units.
"There's a lot of mold. They're going to have to dig up the sewer lines and do a very extensive rehab."
Such a rehabilitation, though, could help end the dilapidated site's effect on nearby property values.
"It's been a blight on the neighborhood," said David O'Neill, Fayette County's property valuation administrator. "As soon as you come into this neighborhood, you've got several acres of chain-link fence and boarded-up buildings.
"Who would want to buy property in an area like that? I think we've seen that play out in purchases over the years and, hopefully, this will turn that around."