Wednesday, May 26, 2010
Written by Leslie Turk
An eyesore for the past year and a half, not to mention the perception the abandoned project created about the state of local construction, the Reserve at Acadiana is back on track.
It was late 2008. Lafayette, yet to be hard hit by the credit crunch taking hold nationally, saw one of its biggest commercial projects come to a screeching halt. The Reserve at Acadiana, a 276-unit, $15 million apartment complex adjacent to the Mall of Acadiana, had been abandoned, the result of what Baton Rouge-based PHL Construction’s Arthur Lancaster called “a slowdown in funding because of the credit crisis.” At the time, the complex was owned by Baton Rouge’s Peek-Howe Real Estate Inc. and was being built by PHL. The Louisiana Secretary of State’s office listed Lancaster as PHL’s manager and Robert Peek and Lacy Howe as its members.
It was by far the largest project in the city to stop construction in decades. And it created the perception that trouble was on the horizon for Lafayette. But don’t worry, Lancaster assured Acadiana Business’ sister publication, The Independent Weekly, for a December 2008 story: Funding issues had been worked out, and construction would resume after the first of the year. Barring any unusual weather, the project would be complete by late July 2009.
None of that happened.
Now, almost a year and a half later, the project has a new owner, an entity controlled by Hayman Woods, a Dallas-based real estate private equity firm. Hayman Woods’s local operating partner is Stephen Keller, whose Baton Rouge-based companies, Block Builders and Vintage Resources, will be responsible for completing the construction and managing the property. Keller is perhaps best known for creating Baton Rouge’s Towne Center, a lifestyle shopping center with highly sought-after retailers like Whole Foods, P.F. Chang’s and Fleming’s Prime Steakhouse.
Keller’s also been kicking tires in Lafayette for some time, having once hoped to team up with a local group to develop 125 acres of the Boustany property at Kaliste Saloom and Ambassador Caffery into an ultra high-density traditional neighborhood development (The Independent Weekly “Groundbreaking,” Jan. 16, 2008). That project’s been put on hold indefinitely due to the economic downturn and credit crunch.
Keller, however, officially made his way to Lafayette in mid-April, when Hayman Woods took over the stalled project, which is roughly 60 percent complete. Construction should resume within 30 days. “We’re three to four months from turning the clubhouse and first units over for rent. We’ll turn them over in phases,” says Clay Likover, managing director of the Dallas firm. “We’re probably eight months from being totally complete. If you were to look at a project like this, start from scratch ... it would be probably 14 to 15 months.”
Today’s Reserve at Acadiana — the name is being retained — is in much better condition than what The Independent found in December 2008. At that time, the walls and roof were up, but windows and doors had not been installed in all the units, siding wasn’t complete, and there were places where black felt paper hadn’t been installed, leaving plywood exposed. Rain had poured into the openings, creating issues with mold and mildew contamination.
“We were amazed when we started doing our early due diligence [because] the bank and former owner of the project, Peek Howe, did just a fantastic job of drying in the project to prevent any deterioration,” Keller says. To ensure the project had no underlying problems, multiple engineering and construction consulting firms were called in to assess it. “[All exteriors] were closed in, protected from the elements,” Keller continues. “The project has just been maintained, was in phenomenal shape.” Additionally, all doors and windows had been screwed shut.
Says Likover, “We look at buying projects that are half built ... all over the country. A lot of times the copper pipe is stripped out of the wall. They’ve stolen appliances. Sometimes you see spray paint destroy stuff. There was literally none of that. Not one piece of copper pipe was stolen. All the dishwashers, fans, and all the tubs and sinks, all of that is just there, stored, ready to use. No vandalism. I don’t know what they spent on the security guard protecting it, but it must have been a lot.” Likover notes that the security guard lived on the site in a trailer for the last year.
The new owners say they can’t disclose the purchase price due to their agreement with Compass Bank and maintain they’ve yet to determine what their final construction costs will be. “The way it really works is that we bought the loan on the complex, and we had to take it to a foreclosure to acquire full ownership of it,” Likover says.
The Reserve at Acadiana offers one bedroom efficiency, standard one bedroom, two bedroom and three-bedroom units with rates running $800 to $1,250. Among the amenities are washer and dryer in each unit, attached and detached garages, resort-style swimming pool, outdoor volleyball courts, a barbecue area, luxury club house with fitness and business centers, and an indoor half-court for basketball.
Likover is confident about the project, noting that the independent market research conducted for his firm by Axiometrics Inc. shows an average April occupancy rate of 89 percent for nine Lafayette complexes considered competitors, with 23 units absorbed in the last two months alone.
Lafayette Parish complexes that are members of the Acadiana Apartment Association, which represents a much broader range of properties, have an average 94.17 percent occupancy rate, according to the Lafayette Economic Development Authority.
Now that he has a foot in the door here, Keller believes there will be more opportunities to do business in the Lafayette market. “We think that it is one of the bright spots in Louisiana,” he says.