Zender trying to sell 18 apartment complexes for about $40 million

A locally based property management firm is struggling to find a buyer for its downtown apartment complexes, even as the
city's rental market continues to thrive.

The privately owned Zender Family Limited Partnership, which was founded 38 years ago, placed its 18-property apartment portfolio
up for sale in November. Six months later, it's still looking for a buyer.

The family's broker now says the apartments could be pulled off the market within the next couple of weeks.

"As we stand here today, the likely outcome is they're not going to sell," said George Tikijian of Indianapolis-based
Tikijian Associates, which is listing the properties for an estimated $40 million. "We probably aren't going to get
a buyer who's willing to pay enough. We had some offers, but there was nothing that was good enough for the Zenders."

The deal breaker, many industry experts say, is the fact that the Zender family wants to sell its entire portfolio in one
piece. That makes it difficult to find a buyer who is both interested in the properties and can afford to pay for them, Tikijian
said.

"It's a pretty big portfolio," he said. "It's 18 properties, so it's a lot of properties for somebody
to bite off."

The historic buildings contain 934 apartment units in total and range in age, size and architecture. Some were built in the
1920s–or earlier–and have never been renovated, while others were constructed in the '50s and rehabbed in the late 1980s.
They are clustered downtown, just north of the city center in an area that continues to experience soaring occupancy rates
and rising rents.

A report released by Indianapolis Downtown Inc. in May shows that downtown apartment occupancy increased to nearly 96 percent
in 2007 from about 91 percent in 2006. Rental rates have jumped more than 14 percent since 2000 and now average $1.03 per
square foot.

Zender's rents range from $365 a month for a studio apartment to $2,000 a month for a penthouse.

The downtown rental market typically is one of the strongest in Indianapolis, said John Sebree, a managing partner of Carmel-based
apartment developer Watermark Residential. He said it would make sense for any rental property owner to sell in the current
situation.

"It is a very good time in the market when you review the fundamental economics of the apartment industry," he
said. "There's upward pressure on rents; there's upward pressures on occupancy, especially in the downtown market."

On the flip side, though, the current credit crunch is making financing increasingly difficult for buyers. Interest rates
continue to rise and many lenders today require higher down payments, Sebree said.

Indeed, the sheer magnitude of the Zender portfolio makes it difficult to handle in today's credit crisis, said John
C. Hart, president of the Carmel-based apartment developer J.C. Hart Co. Inc.

He briefly looked into purchasing the portfolio, but quickly decided against it. He said it would be too time-consuming to
review each of the Zender properties to make sure they didn't have any environmental problems or other issues that would
prevent renovations or improvements.

"It's a monumental undertaking," Hart said.

Other real estate brokers suspect the lack of buyers simply reflects the times.

Steve LaMotte, a senior vice president with the Indianapolis office of CB Richard Ellis, said fewer bidders in the Midwest
are looking for large portfolios these days. Many would prefer to purchase one or two properties at a time, he said.

He pointed to the Denver-based real estate investment trust AIMCO as an example. When the company decided to sell nine of
its central Indiana properties in January, it initially marketed them as a portfolio but eventually chose to split them up,
he said.

If that's the case, some wonder: Why wouldn't the Zenders just break their properties apart?

Tikijian said the family is not interested in splitting up its assets.

"Their plan was either sell the business or not sell," he said. "To them, it's a business; it's not
just a bunch of properties."

He said their decision to sell was motivated more by personal reasons than by any rush to cash in on the current market.

"This is not them saying, 'OK, let's sell these buildings because the market's hot,'" he said.
"This is more of a personal decision of being in business or not being in business."

Managing partner Tim Zender declined to comment on the sale or the reasons behind it, but denied rumors that the decision
was prompted by family infighting. He pointed to the company's 38-year history as proof that everyone can work together.

Tim Zender runs the business with his four brothers and sisters: Tracy, Marc, Michael and Lisa. Tracy oversees apartment
complex operations and the janitorial staffs. Marc is responsible for payroll, accounts payable and accounts receivable. Michael
works in the maintenance department, and Lisa focuses on leasing and marketing. All are involved in day-to-day management,
Tim Zender said.

The Zenders' father, Jim, started the company in 1970 and made a name for himself by snapping up properties to create
simple, clean, affordable apartments.

Scott Keller, a competing property developer in the 1970s and 1980s and a former city-county councilor, said Jim Zender's
formula was fairly basic.

"Jim pretty much kept the things the way they were," said Keller, now an art and antiques appraiser.

The elder Zender would sand the floors, repaint the walls and upgrade the electric systems, but he kept the basic structure
of the apartment units intact, Keller said.

That approach seems to have paid off over the years, said Scott Pollom, principal and vice president in the Indianapolis
office of Colliers Turley Martin Tucker. He said the company has developed a reputation for maintaining its properties.

"Zender's a fine management company," he said, "so you know you're not buying into a lot of problems."

Jim Zender handed the reins to his children 15 to 20 years ago, but he remains active in the general partnership, Tim Zender
said. Jim and his wife, Grace, were both involved in the decision to sell, Tikijian said.

If the properties do not attract a buyer, Tim Zender said, the family will continue doing business as usual.

"We've been doing this for 38 years–you figure we'd get it right," he said.