Nuveen acquires Junction Flats.

Byline: Matt M. Johnson

Flat returns on a newer Minneapolis apartment building might have kept the price down when a Chicago-based investor paid $50 million last week for Junction Flats in the North Loop neighborhood.

Nuveen, the parent company of TIAA, has paid just $1 million more for the 182-unit Junction Flats apartments than the seller paid when the building was new in 2014, according to a certificate of real estate value made public on Monday. The 5-year-old, market-rate building, which was developed by Dallas-based Trammell Crow, is in the northwest quadrant Fifth Street North and Sixth Avenue North.

Junction Flats is just north of Target Field and the Target Field Station transit hub. Metro Transit's Heywood campus is immediately to the west.

The seller, Charleston, South Carolina-based Greystar, made the sale because it was the right timing in the life cycle of one of the company's investment funds, said Abe Appert, an executive vice president with the Minneapolis office of CBRE. Appert, along with Keith Collins and Ted Abramson, marketed Junction Flats for Greystar.

The six-story apartment block drew "a lot" of offers, Appert said in a Tuesday interview.

"It was north of 10," he said. "Capital continues to flow to Minneapolis multifamily properties."

The deal, which closed on Oct. 10, works out to $274,725 per unit, which is well above the $135,390 average selling price for 56,037 apartment sales tallied by the Finance & Commerce Twin Cities Apartment Sales Tracker since 2011. Hennepin County values the property at $45.9 million for tax purposes.

The slim gain Greystar made on the sale was likely tied to slow rent growth. Greystar purchased the property for "fair market value," but didn't realize the level of returns needed to get a higher selling price, Appert said.

"Net operating income just remained pretty flat," he said.

Greystar made the North Loop sale about 10 months after paying $69.75 million for the 424-unit Avana Southview Apartments at 4930 Ashley Lane in Inver Grove Heights.

Nuveen...