Office of the President
                                            September 18, 1984




                                            F        ft 13

Members, Board of Trustees:

PURCHASE OF THE AMERICAN TOBACCO WAREHOUSE AT 574 SOUTH UPPER STREET

Recommendation:  that the Board of Trustees authorize the President of
the University or his designated representative to enter into a
contract for the purchase of real property at 574 South Upper Street,
which is owned by American Brands, Inc., of New York, New York for a
sum not to exceed $1,107,300.

Background: The property at 574 South Upper Street is adjacent to the
UK Service Building and directly across Limestone Street from the
Student Center.  It is known as the American Tobacco Warehouse, which
is a two-story facility of wood and masonry construction built in
1909.  The structure sits on 2.38 acres and encompasses 156,271 square
feet of space.   Of this sum 4,500 square feet is air conditioned
office space.   The first floor is largely filled with manufacturing
equipment which American Brands will remove at its expense.         The
second floor is warehouse-type space. The property has been extremely
well maintained.   The property only came onto the market this past
June with the unexpected announcement of the closing of the facility
by American Brands.  The University has immediate need of this type of
support/stcrage space.  Upon acquisition of the property, space would
be assigned to the Geological Survey, the Department of Anthropology,
the Physical Plant Division, the Division of Design and Construction,
the Tobacco and Health Institute, and the College of Engineering. The
acquisition of this property should meet the support-type space needs
of the University for the balance of this century.       Funds for the
purchase will come from investment earnings on private funds rather
than state general funds or student fees.   Mr. Robert W. Crabtree, an
MAI appraiser from Lexington has put a value on the property of
$2,000,000; Mr. Harry Lewman, an MAI appraiser from Louisville has
valued the property at $2,050,000.    The University has been able to
negotiate  a purchase price    for  the property   of approximately   55
percent of its appraised value. This proposed transaction has been
presented to the Secretary of Finance of the State of Kentucky for his
consideration and approval as required by the Kentucky Revised
Statutes.


Action Taken:  Approved__         Disapproved            Other

Date:    __ _i___ _____         _ , 1984



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