University House ups the stakes in lawsuit over costly complex

    The owners of University House, a student housing complex near LSU’s North Gate, sued the property’s former owners several months ago asking for $2.6 million—but the bill has since risen by nearly $1 million.

    In new court filings, the Scion Group and other owners of the complex—who bought the development for a record-setting $108.6 million two years ago—ask for $3.4 million and allege the developer could be responsible for as much as $6 million spent fixing botched construction. They allege developer LMK left the costly student housing complex riddled with problems and failed to live up to a warranty agreement.

    “As of today we have incurred more than $4 million in remediation and repair costs,” says Scion Group Vice President Eric Bronstein. “We have the cash flow as a company to cover (ongoing renovations) but we’re seeking to recover what we can.”

    The lawsuit against LMK—an affiliate of the Georgia-based student housing developer Landmark Properties—is now being heard in the 19th Judicial District Court in East Baton Rouge Parish.

    University House owners, which include the Ministry of Finance of Singapore, the Canada Pension Plan Investment Board and the Scion Group, allege LMK left the building with “pervasive leaking and mechanical defects” and then refused to fix the problems, thereby breaking the warranty agreement. An engineering firm last year documented the issues in a 128-page report, noting water damage, fire alarm system failures, sewage backup problems and a host of defects in construction.

    Landmark denies the allegations and is fighting them in court. The company could not be reached Wednesday morning for comment, but previously has characterized the litigation as “unfortunate.”

    University House has moved tenants to other complexes nearby while millions of dollars in repair work is completed. “It certainly is potentially damaging to our reputation,” Bronstein says. “But we did our best. We had a restoration company in there full-time working around the clock to make sure it wouldn’t get any worse.”

    The new owners bought the 287-unit complex for $378,386 per unit in 2015 from Landmark Properties. Landmark originally bought the land for $10 million and spent $50 million on construction.

    Leasing activity is in line with the market as the fall semester approaches, Bronstein says, and he hopes to keep tenants in the building in the coming months instead of moving them to nearby complexes.

    —Sam Karlin

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