Providence apartments to become condos

By converting existing units at Jefferson at Providence Place, developers jumpstart the availability of condominiums downtown.

The 330 apartments in the Jefferson at Providence Place complex will be converted into condominiums and become the first large-scale condominium development to open in the downtown area.

Joseph R. Paolino Jr., a developer and former mayor of Providence, partnered with The Athena Group LLC, of New York City, to buy the sprawling four-story apartment complex on Kinsley Avenue behind the Providence Place mall. They paid $81 million. "We can sell them now," Paolino said. "People don't have to wait through a two-year construction period."

The condo conversion leapfrogged the efforts of three downtown developments that are building condo high-rises from the ground up: Waterplace, a 193-unit complex in the Capital Center District; the Residences at the Westin, a second tower at the hotel that will include 103 condominiums; and One Ten Westminster, a 130-unit high-rise that has yet to begin construction. None will be complete until 2007 or later.

"The beauty of entering the market now is that people can have instant gratification," said Barry S. Seidel, executive vice president of The Athena Group. "They can lock in interest rates while they are historically and terrifically attractive."

The condo complex, which will be called "903," will not compete head-to-head with the high-rise condos, Seidel and Paolino said. The converted units will sell for between $195,000 and $450,000. The other projects start in the $300,000s and go up to $2.5 million.

But Paolino said the 903 complex will be just as luxurious "I think the amenities match up to anything you see in Providence and anything you will see," he said.
The apartment complex already has a swimming pool, fitness center, conference room, lounge area, 20-seat movie theater and a parking garage. The developers also plan to redecorate the lobby and hire a concierge.

Jefferson at Providence Place was built by JPI, a Texas-based company that spent $58 million to develop the complex. The apartments opened in 2003 and are 82 percent full. Paolino said the 50 vacant apartments will go on sale immediately, and the people living in the other units will have first rights to buy them, or leave when their leases expire. Based on other condo conversions, Seidel estimated 20 percent of the renters will buy a unit.

Athena-Providence Place – which is the name of the partnership between The Athena Group and Paolino – plan to spend $6 million to upgrade the apartments and landscaping. Improvements to the units may include tiled floors and granite counters in the kitchens and marble counters in the bathroom.

The Athena Group has experience converting apartments into condominiums. The firm converted The Waverly in South Beach, Miami, and four buildings in the suburbs of Washington, D.C. The company was founded in 1993, and has invested $200 million in real estate. It holds $1 billion in assets. The company's strategy is to purchase properties that are undervalued or poorly managed.

Seidel and Paolino believe there is an unmet demand for condos in Providence.
This is Athena's first project in Providence, but Seidel said it won't be the last. "We hope to have a very long-term relationship with the city," he said.

The new name for the condo complex, the 903, refers to the building's 02903 zip code and indicates the developers' confidence in the changing neighborhood. "The 02903, we think, is a neighborhood that is coming alive, strong and vibrant," Paolino said.

Across the Woonasquatucket River from the development, more than 70 businesses and 1,900 workers occupy The Foundry. The mill complex also houses 202 apartments of the newly opened Promenade. The Promenade began accepting tenants three months ago and has signed leases on 102 units, said Josh Fenton, spokesman for the complex. The apartments range from $1,000 to $3,500 a month. Eleven residents from Jefferson have already moved over to The Promenade, Fenton said.

On the other side of the 903, however, sits the deteriorating shell of the Providence Fruit and Produce Warehouse. Carpionato Properties Inc., of Johnston, has purchased the warehouse and plans to convert it into a mixed-use space that includes retail.
The developers of the 903 have hired Providence architect Bill Warner to recommend ways to enhance the riverwalk that runs along the Woonasquatucket. Of the $81 million purchase price, the developers paid $65 million to JPI for the building and $16 million to Bernard Wasserman of Wasserman Properties for the land.

Wasserman had purchased a portion of the land from the Providence Redevelopment Agency in 2000 for $1.5 million to be paid over 29 years. In April, Wasserman offered to pay the remainder, said Thomas E. Deller, executive director of the redevelopment agency. The agency settled with Wasserman for $892,000, about $17 a square foot. Athena-Providence Place paid Wasserman $77 a square foot.

"I did broach the subject of paying us more and they sort of laughed at me," Deller said. Deller said the price was determined by calculating the "present dollar value" of the 29-year agreement. He called the payment a fair value based on a contract that was negotiated in 2000 by "the previous occupants of this office.

Paolino and The Athena Group inherited a 10-year tax break the city gave to JPI.
The city attempted to terminate the tax break, saying that it was not intended for condominiums, according to John C. Simmons, the city's director of administration. A Superior Court judge ruled last month that the tax break was transferable as long as the property was used for residential purposes.

The city will receive $6.2 million in taxes over the 10-year period, a savings of $5 million to the property owners. There are seven years left on the tax treaty and the city is figuring out how the tax savings will be dispersed among the condo owners, Simmons said.