The owners of a 270-unit apartment tower just west of Chicago are looking to sell, hoping that lack of new supply in the area will boost the price at an otherwise challenging time.
CBRE brokers have been hired to sell the 21-story Vantage Oak Park tower at 150 Forest Ave. in Oak Park, Illinois, according to a marketing brochure on the property.
It’s a relatively rare opportunity to buy an apartment tower in Oak Park, where high-rise projects are infrequent, but it comes as rising interest rates and other factors have reduced the volume of multifamily sales throughout the country.
Someone familiar with the property estimates it could sell for $90 million or more.
That would be less than the $102.75 million that Chicago-based multifamily investor Magnolia Capital and partner Goldman Sachs paid for Vantage Oak Park in January 2018. But it would be far above the approximately $66.6 million balance on a commercial mortgage-backed securities loan on the property, according to CoStar loan data.
CBRE is marketing the Oak Park tower as a chance to buy a well-located property below the amount it would take to build today amid high construction and borrowing costs.
Built in 2016, the Gensler-designed tower is almost 97% leased, according to CBRE, with rents at $3.13 per square foot. A new owner could push up rents by upgrading units and adding indoor and outdoor amenities, the CBRE materials say.
Commercial space on lower levels is fully leased to a Cooper’s Hawk winery and an Edward-Elmhurst Health medical clinic.
Rising interest rates and other financing challenges have slowed the pace of sales and pushed down prices since the second half of 2022.
The highest-priced apartment deal in Chicago of early 2024, the $144 million sale of the 500-unit Paragon Chicago tower in the South Loop for $144 million, was almost $30 million below what it cost to build a few years earlier.
In another recent deal, the 81-unit Aberdeen West Loop complex sold for $34.5 million, well below the previous $40 million sale price in March 2017.
Vantage Oak Park was the first local acquisition by Chicago-based Magnolia Capital, which was founded by former Waterton executive Maxwell Peek in 2016. Peek, the company’s CEO and managing partner, did not respond to a request for comment from CoStar News.
The firm also invests in markets including Boston; Atlanta; Los Angeles; Portland, Oregon; Oakland, California; and North Carolina cities Charlotte and Raleigh, according to its website.
Magnolia’s CMBS debt on Vantage Oak Park, which matures in 2028, was added to a watchlist late last year because the floating-rate debt sharply increased in the previous year, according to CoStar loan commentary.
The interest rate rose from 2.52% in June 2022 to 6.78% a year later, according to the commentary, causing revenue to fall below the level needed to service debt. Yet the loan, which matures in early 2028, is still performing.
For the Record
The sellers are represented by CBRE brokers John Jaeger, Justin Puppi, Jason Zyck and Danny Zeboski.