A few months after pulling off the highest-priced multifamily purchase so far this year in Chicago, a California investor has achieved the same distinction in the suburbs with a $102 million deal.
An affiliate of San Francisco-based FPA Multifamily earlier this month bought the 642-unit Reserve at Hoffman Estates complex from InterCapital Group.
The price for the property at 875 Pacific Ave. in Hoffman Estates, Illinois, was just over $102 million when including the assumption of a Fannie Mae loan on the property from the seller, according to Cook County property records.
With the deal, FPA Multifamily and its affiliates now have invested more than $457 million on Chicago-area apartments in just over the past year. The shopping spree has coincided with factors such as rising interest rates that have pushed down values and created opportunities for well-capitalized investors that are willing to bet on a recovery of values and a continuation of rent growth in the Chicago market.
FPA’s deals during that time include the $144 million purchase of the 47-story, 500-unit Paragon Chicago tower at 1326 S. Michigan Ave. in Chicago’s South Loop. That is the highest price paid for any multifamily deal in the city so far in 2024, although the price was below the amount of cost the sellers to build the tower, CoStar News reported in March.
Other FPA investments in the area since June 2023 include $55 million for the 267-unit Seneca tower in Chicago’s Streeterville neighborhood and $96 million for the 558-unit Westmont Village complex in the western suburbs.
In another deal completed this month, FPA paid $60 million for the 270-unit Emerson tower just west of Chicago in Oak Park, Illinois.
The Hoffman Estates deal, previously reported by Crain’s Chicago Business, came just over six years after Houston-based real estate investment management firm InterCapital bought it for a slightly higher price, $104 million, according to property records.
FPA Multifamily and InterCapital Group did not respond to requests for comment from CoStar News.
Completed in the late 1980s, the complex is just 2.3% vacant, with asking rents of $1,799 per unit and $1.86 per square foot, according to CoStar data.
FPA is now marketing the property, which is about 30 miles northwest of Chicago's Loop business district, as ReNew Poplar Creek.
Low-Interest Debt
The sale price for the more than 36-acre complex of low-rise buildings included FPA taking on a loan with a remaining balance of about $80.14 million, set to mature in June 2028, according to property records.
In assuming the loan, FPA inherits an interest rate of 4.52%, well below today’s rates.
Loan assumptions have been used by some sellers as one tactic to help overcome sluggish sale volume and reduced pricing, which is a selling point on a 191-unit building in Chicago’s Lincoln Park neighborhood that recently hit the market.
Other completed sales boosted by in-place, low-interest debt has included the more than $94 million sale of the 416-unit Haven on Long Grove complex in Aurora, Illinois, and the nearly $31 million sale of the 78-unit MODE Logan Square Apartments in Chicago’s Logan Square neighborhood.
For the Record
The seller was represented by Newmark brokers Liz Gagliardi, Chuck Johanns and Susan Larson.